Last week, the rumor percolated that Microsoft was gearing up to wheel and deal on their 4GB Xbox 360, planning to offer the console/Kinect bundle for $99 upfront, with the caveat of a two-year “contract” for Xbox Live Gold at $15/month.
Sure enough, Microsoft Stores everywhere (all 21 of them) will be facilitating the deal and signing customers up with a monthly payment plan — similar to the way the Apple Store or a shopping mall kiosk would divvy out a new phone contract. It’s the first offer of its kind for a major video game console — certainly not something that was available on your grandfather’s Nintendo 64 — but what ramifications could it have for future pricing patterns?
The offer was made official today on the Microsoft Store website, which provides prospective buyers with a printable coupon (pictured below) to be redeemed on-location. Essentially, the $99 starting point is more expensive in the long haul (costing $459 after adding in 24 months of Xbox Live Gold @ $15/month) than simply buying a $299.99 4GB Xbox/Kinect bundle alongside 2 years of Xbox Live Gold upfront (a retail total of roughly $420). Terminate early, and you’ll likely be slapped with additional fees. The whole idea is to woo customers lacking the desire to fork over a near half-K in just one day, binding them instead to a long-term cycle of progressive payments similar, again, to a smartphone plan or car lease.
Part of the initiative is no doubt a progeny of a burdensome economy, and yet, it’s hard to imagine this being a whimsical move by Microsoft just to sell more 4GB Xbox 360s. When the Xbox 720 releases in 2013 or 2014 (conveniently close to when a current 4GB 360 contract would expire), a price near $400 is more believable for the console alone — not including Xbox Live, Kinect 2, and whatever else it might bring to the table. Today’s new offer may well be a next-gen test run, and Microsoft may be keeping it in-house while they work behind the scenes with retailers like Best Buy and GameStop.
If that’s the case, it could be a revelation for the company. The ease of entry afforded by a cheap contract start-up, combined with that walking-out-the-door feeling of getting an exponentially greater amount of merchandise than you paid for, has the potential to entice entirely new, lower-income demographics. The traditional console hold-outs, as well — the ones who deadbolt their wallets until a 2nd-year price drop or a Black Friday deal appears — might find that an equal value exists in owning a new system at launch and not missing out on its early attractions.
Of course, in the end, it’s the retailer that wins out with more of your money. And if a new version of the product comes out during your contract period? Too bad — unless you want to enter into another long-term deal and tie both hands behind your back.
There are pros; there are cons. Whichever one supersedes the other could end up having a pivotal role in how next generation consoles are purchased.
Ranters, $99 upfront for $420 of merchandise — it sounds great! But is it worth the long-term expense, the restrictive contract stipulations? Do you see this as a Microsoft test drive for the Xbox 720?
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