Microsoft Offers Xbox with Kinect for $99 Plus $15 a Month
The rumors about a $99 Xbox are true. Well, sort of. Microsoft has launched what it is calling an "amazing deal" to "jump into the Xbox experience for only $99*."
Of course, there is an asterisk next to the price tag for a reason. There's a catch to the steal of a deal on the Xbox 360 video game console with Kinect, which usually retails for $199 -- $299 with the Kinect.
Indeed, in order to pick up an Xbox 360 4GB console with Kinect for only $99, consumers are obliged to sign a new two-year contract with Xbox LIVE Gold service for $14.99 a month. And Microsoft was quick to point out that this is a promotional offer that it could terminate at any time.
Adopting the Cell Phone Model
We called Michael Gartenberg, an analyst at Gartner, to find out how he thinks the Xbox offer will resonate with consumers. He told us the model definitely represents a new way of selling video game consoles.
"This model far more resembles the way cell phones are sold than video games," Gartenberg said. "If you look at existing deals, it's probably a little more expensive to make your purchase this way but for a lot of consumers the upfront cost is more important than the total cost of acquisition, so it's likely to help Microsoft gain some new customers -- and in particular help drive the Xbox experience in the living room beyond the gamer."
And therein lies the fuller story. Gartenberg pointed out that Microsoft's aspirations with the Xbox go deeper than gaming -- Microsoft wants consumers to sign up for its Xbox LIVE Gold subscription service and gain access to more services. For example, consumers cannot use Netflix, HBO GO or any of the extended Xbox services unless they are Gold members.
Going for the Gold
Xbox comes with free membership to LIVE, which offers demos of the latest games and access to thousands of games, movies and TV shows. But Xbox LIVE Gold offers premium content, as well as an online multiplayer experience, for $59.99 a year.
Xbox LIVE Gold offers content from ESPN, Netflix, Hulu and more. Gold members can instantly watch movies, TV shows and sports, and use their voice as the remote control with Kinect. Xbox LIVE Gold members can also access Facebook, Twitter, Last.fm and social features like Avatar Kinect, Video Kinect and Xbox LIVE parties.
"This is another way for Microsoft to drive Gold membership without consumers having to pay the upfront price of the Xbox at the beginning of the life cycle and then having to pay that yearly subscription fee," Gartenberg said.
"It's just a different way of buying the same product and amortizing it over two years. We know from the cell phone industry that consumers do go for that model. We'll have to wait and see how well it shifts into this space but lots of people will be paying attention to how successful this model is for Microsoft."
The Xbox 360 remains the leading console in the United States, selling more units in March than any other console. It was Xbox 360's 15th consecutive month as the best-selling console stateside with a 42 percent market share of current generation console sales.
Posted: 2012-05-07 @ 3:33pm PT
For those who purchase their TV or furniture through a rent-to-own store, this idea might sound reasonable, otherwise it's pretty stupid. XBox Live for 12 months is only $48 through Amazon and sometimes only $40 at Best Buy.