The Layaway Xbox, or how the Microsoft Store will ruin the 360′s final year
My former Daily colleague Chris Plante picked up an interesting Xbox scoop today, one that is less about video games and more about commerce. According to The Verge, Microsoft will begin selling a subsidized Xbox 360 console next week: $99 for the console and a Kinect sensor, along with a monthly $15 fee. That’s a meaty $200 up-front savings for the Kinect-ready Xbox 360.
The deal hearkens back to the days when Best Buy and other big box retailers pushed computers out the door at rock-bottom prices, then tacked on an ISP subscription to recoup. But then, the term “hearkens back” says a lot about how well that business model worked out; retailers have scrapped that pricing model, because customers got wise to early-termination headaches and an ultimately higher cost. (If cellular providers weren’t colluding about two-year contracts in the States, perhaps that too would crumble, but alas.)
Unless Microsoft plans to pack in more games or attach Xbox “app” subscriptions like Netflix or Hulu Plus, this deal too falters in the total-price department, and not just in terms of a roughly $30 differential. All signs point to a new Xbox reveal in one month at the 2012 Electronics Entertainment Expo, which will immediately devalue the aging Xbox 360 system–one that assumedly no longer costs more than $99 to produce. Now’s as good a time as any to entice new buyers with a price point switcheroo.
But at that point, Microsoft would be wiser to position the old Xbox as a solid games machine that can also “live forever” as a media streaming box, then slash the price outright. $149, maybe $129. Just the XBLA games available as of today are reason enough to pay a few bucks more than a Roku; even better, Microsoft may announce that Xbox Live games for the new console will be backwards compatible with the old one, since they typically don’t push the current system’s limits, giving the old box a stupidly long lifespan. (This is just a hopeful guess on my part; I have no rumors or hearsay to back this backwards-compatible thought.)
What’s getting in the way, then, is the Microsoft Store wing of the company, which is so desperate for foot traffic that it’s going forward with this price stunt. Without that anchor tied around its ankles, Microsoft’s entertainment divisions could go for a real, across-the-board price drop; instead, they’re stuck with a layaway payment plan that will be exclusively available at Microsoft Stores, blocking partners like Gamestop and Best Buy from helping with the push.
If I were the headline writer at The Verge, I would’ve phrased things differently: Microsoft Has One Week to Change Its Mind. Sadly, the Microsoft Store will instead get in the way of a clean price drop that would push the platform for its final year before the next Xbox bows, and that will give Sony a nice cushion to increase customer goodwill and prepare for a 2013 showdown.




