Microsoft Corporation (NASDAQ:MSFT), taking cues from the cellular data providers, may have changed the way gaming consoles are sold today with a new pricing plan on its Xbox console. The company is offering an Xbox with a Kinect interface for $99 with a two year contract to the firm’s Xbox live service. The pricing strategy ushers in a new way to pay for consoles and one that may be here to stay as Microsoft gears up to reveal its latest iteration of the product in the next year.
A customer will pay $99 and receive a 4 Gigabyte Xbox 360 console and a Kinect interface along with a two year subscription to Xbox Live Gold. That subscription will cost $14.99 per month. That leaves the total cost of the full package at just under $460 over the course of its lifetime. That is roughly the same as it would cost to buy all of the parts of the deal individually. The low introductory price seems an attempt to induce customers to buy the console first time. To buy the Xbox console and the Kinect together costs $300 at the moment. The $99 price tag should seem more attractive to customers.
If the offer works the company will hope to increase sales of the consoles in a depressed console market. Though still the best selling on the market sales of the Xbox 360 are down year on year. The console market is coming to the end of its technology cycle. It is one of the few tech market that still has a recognizable and clear pattern in sales. New consoles by Sony and Microsoft will both be revealed in the next year according to rumors and Nintendo is planning to release its next generation console before either of the other two heavyweights.
The new offer, depending on its success, could bring about a change in the way consoles are marketed into line with the cell phone and tablet markets which operate under the subsidy/contract model. Xbox Live Gold offers customers a great deal of video and music content competing directly with smart TVs and other media devices including Apple Inc.’s (NASDAQ:AAPL) Apple TV.
The offer will only be available at Microsoft’s real world stores from today though future roll out of the offer to other platforms remains a possibility. The company is making efforts to innovate across the board recently in technology as well as sales.