Why This Is the Right Time for the Xbox 360 to Get a Price Cut

The Verge claims that Microsoft will launch a new version of the Xbox 360 which will only cost $99. This is expected to happen “as early as next week,” but considering that E3 is in a few weeks maybe this announcement will make much more sense then.

The report states that console will come out in bundle that will include a 4GB Xbox 360 and Kinect, but there’s a catch, as the package also carries a two-year contract. This contract means that those users who buy the aforementioned bundle will also have to pay a monthly subscription to Xbox Live Gold (which is currently $15.) In addition to the 4GB 360, Kinect and the subscription to the online service, a two-year guarantee and some kind of streaming content that hasn’t been detailed yet, will also be featured. Taking into account that one or two years may pass before a successor to the console is officially announced (as this is not likely to happen at this year’s E3,) a price cut would make a lot of sense.

In fact, I would argue that this is the perfect time for a current-generation console to receive a massive price drop. Companies should definitely focus on selling more and more of their consoles as this would mean that more users would be getting more of their software. As a consequence, developers would be willing to create more games for those consoles which would translate into extra money to invest in even more games. For users though and if this bundle is something that Microsoft is thinking about releasing soon, this may not be such a great deal. The amount of content buyers get is really good, but why should they be tied to a contract that grants a service for two years?

microsoft xbox 360 kinect adventures

In a sense, this seems like the contract most cell-phone providers offer: the initial price of the product is quite cheap, but in the long run this promotion may not be as appealing as it seemed at first sight. Currently, the cheapest Xbox 360 is the 4GB version which is available for $199 and a Kinect Bundle is $299.99. An Xbox Live Gold subscription on the other hand is $59.99 a year. But what does this mean? If you want to get an Xbox 360, Kinect and Xbox Live Gold right now that would cost you $420. The upcoming rumored plan would only cost you $99 at first, but paying for the two-year service would cost an additional $360 so the total price would be $459.

For many, this may still sound like a very interesting idea. I disagree, especially considering that not so long ago Microsoft released the Xbox 360 Arcade which was available for $149.99. Granted, it didn’t included a Kinect, two years of Xbox Live Gold and any kind of streaming content, but at the same time it didn’t have any weird two-year contracts. For $149.99 though, users got an Xbox 360, a 256MB memory unit (not a lot… I know,) a one-month free trial of Xbox Live Gold and five Xbox Live Arcade titles. In terms of value, that console was simply amazing, but it was eventually discontinued and replaced with the 4GB version.

Considering that the Xbox 360 is almost at the end of its life cycle a price cut definitely makes a lot of sense, but I don’t think a contract is the way to go. If the console’s successor is in fact coming out at the end of next year as most analysts suggest, Microsoft still has a lot of time to offer promotions that are appealing to different types of consumers. For now, if this bundle is in fact real and it does come out, I’d like to see how well it performs.