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An Xbox 360 for $99 with a 2-year contract? It’s happening next week

by — May 2, 2012 4:27 pm

Microsoft will reportedly next week release an Xbox 360 — Kinect and 4 GB hard drive included — that costs only $99 up front. There’s a catch, though: You’ll have to sign a $15 per month 2-year contract, which includes an Xbox Live Gold subscription and access to some additional streaming content.

This model is similar to the one used for smartphones; taken at cost, an iPhone or high-end Android phone would run for hundreds of dollars — more than most people are willing to pay up front. So a phone’s actual costs are subsidized by the monthly fees paid to the carrier over the duration of a 2-year contract.

The $200 down and $30-90 per month 2-year contract arrangement we take for granted when buying cell phones is arguably a bad deal for consumers. That’s true with this deal, also; a 4 GB Kinect-equipped Xbox 360 runs $300, and two years of Xbox Live Gold add up to $120 — that’s a total of $420. On the flipside, this subscription adds up to $460 — $40 more than the up-front cost, though it’s within the margin where interest and inflation rates make the comparative value uncertain.

But what really matters here is that this will open up new households to gaming and online streaming — households that can’t afford to throw $420 up front. With Microsoft planning to launch a new Xbox 360 music streaming service soon as well, we’re looking at one possible future for online media in the living room.

Source: The Verge Image: bfishadow

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Author: Samuel Axon is the founder and editor of The Interactive. He has covered entertainment, media and technology as a writer, editor and web producer for Mashable, Engadget, Joystiq, Tecca, Yahoo! News, CNN, The AV Club, Nerve and many others.
  • iDr Gonzo

    I see them (Microsoft/X-box) in direct competition with cable/satellite providers already. This is one more move that will inevitably make Comcast and the like start seriously thinking about changing their game plan. 
    On the same note look at HBO’s subscriber based business model. It is the interest of both X-box and HBO to bypass the providers and pick up subscriptions directly. Then assuming others (Showtime etc.) follow Comcast would have a serious threat on their hands. 

    • http://theinteractive.com/ Samuel Axon

      You make a good point, but it should be noted that Microsoft is a close partner with Comcast, Verizon, etc. in offering their content on its Marketplace too. In fact, it’s entirely plausible that some of the subscription content here could be tied to cable companies’ offerings.

      I totally agree that both Microsoft and HBO would be better off bypassing Comcast et al, which is why it’s disappointing that they’re increasingly appeasing them along with Hulu (e.g. http://theinteractive.com/2012/04/hulu-tv-everywhere-cable-tv/). I’m hoping your vision for the future comes true though! It would be awesome.

  • http://readiinginskirts.wordpress.com/ Tia

    I’m admittedly intrigued. As someone who never has say…$400 to spare, but occasionally has $100, and always has $15 a month…it might actually be worth it for me? Even paying an extra $40 over two years? Not too bad. Especially as someone sort of fascinated by the Kinect and it’s potential for awesome. Although…there’s still the whole cost of games bit that is still exactly as prohibitive.

    • http://theinteractive.com/ Samuel Axon

      Some of the best games are Xbox Live Arcade games and they only cost $5-15 in most cases! Fez, The Walking Dead, and Trials Evolution being recent examples.