Taking a lead from the cellular phone market, Microsoft has brought its Xbox 360 console into the world of subsidized pricing. Starting today for as long as the company wants to offer the deal, you can walk into your local Microsoft Store and buy a new Xbox 360 with a 4 GB hard drive and a Kinect with Xbox Live Gold and a two-year warranty for a mere $99 as long as you commit to paying $15 per month for the next two years. Polygon crunches the numbers and warns of that lingering demon of the contract world: early termination fees.
Overall, this bundle will cost $458.76 over the course of two years (before taxes), as compared to a $299 bundle bought outright, plus two years at $59.99 per year for Xbox Live Gold, which can often be found at a discount — so while you'll save some money off the bat by signing that contract, you'll actually spend a little more over the course of the two years.
There's a few more details in the fine print: customers who pass the credit check will have 30 days to return their console for a full refund, though the first month's subscription fee is nonrefundable. That pesky early termination fee starts at $250 in months one through three, drops to $240 in month four, and drops by $12 every month following.
While this offer costs a little more more in the long run, those who are unable to afford a Xbox 360 at the full retail price but can handle a smaller upfront fee plus the monthly payment might find something of value here. Microsoft wants to bring the Xbox into living rooms everywhere as an Apple TV or Roku competitor in addition to competing with the Sony PlayStation 3. Bringing the barrier to entry down as low as financially feasible helps to bring the otherwise comparatively expensive hardware on par with similar entertainment offerings. While it makes more sense to outright buy the Xbox and Gold service if one can afford it, there is value to the installment plan for a portion of the prospective Xbox audience. Even if you're against installment plans, this Xbox offer makes much more sense than renting to own, say, a Xbox 360 from your local rental business and paying double or triple the worth of just the console itself in interest/installment fees by the time the agreement is up. For more on buying a Xbox 360 on an installment plan, don't miss Episode 80 of the Power Button podcast in which Brad Hilderbrand and I discuss why this pricing model makes sense and how it could tip the scales in Microsoft's favor in the present and future media wars.