Friday, 11 May 2012

An Xbox 360 for only $99 ... but not really

Risky business?

In an effort to stay competitive in the current market it's not really a surprise to see companies offer different types of incentives to buy their stuff, or try to determine what the absolute cheapest price they can get away with selling something while still making a decent profit. That's why it's not entirely surprising that Microsoft plans to release an Xbox 360 and Kinect with a $99 price point; sounds pretty ludicrous, right? Well, you know what they say about a deal being too good to be true.

It is true that the price of the console is $99; you can take it home for that much. The caveat is that for that rock bottom price you also have to agree to a two year subscription of Xbox Live Gold for $15 dollars a month. It's worth noting that if you buy a yearly subscription to Gold that it would normally cost you only roughly $5 a month. That means that while outright buying the console would cost around $300, that this method will ultimately end up costing about $460 thanks to the long term contract.

Let me say that I'm not necessarily against finding new ways to get games and systems to people who want them, but how this goes down is going to depend heavily on just how this is marketed. People aren't known for reading the fine print even in the best situations, so unless it's made completely and immediately obvious that this is $99 and then a two year subscription rather than just a flat $99 dollar system, someone is going to bring one of these home and be in for a nasty little surprise.

There are some concerns over this, as outlined in this article from Game Politics. I think perhaps the most pertinent statement is also the simplest:

"Maybe I'm just a finance geek, but the $99 360/Kinect with a 'subscription' looks a lot like a full priced sale financed at around 10% to me,"

Add on the fact that this deal is coming around at roughly the same time that rumours of new consoles are brewing and you wind up with some odd considerations. If you're still locked into a two year contract then are you really going to be buying the any new system? It can be argued that this deal might be for people that couldn't afford to otherwise pay for a 360 upfront, and it is true that the $15 a month is getting you something (a gold membership), but there are questions looming.

For example what happens if someone doesn't (or rather can't) make their monthly payment? Does Microsoft brick their console, do they take it away from the person? What happens if Microsoft decides to change the terms of the deal down the road? It doesn't seem like there would be much recourse since by entering into the subscription a person could be argued to have entered into a binding contract with Microsoft and thus wave any right to litigation, as well as unknowingly needing to take a personal onus to be kept abreast of any changes to the terms of service.

Perhaps it's just me, but I think I'd rather just save the $15 a month until I'd have enough to buy a console upfront with no strings attached. I'll admit that this idea might have merit, but this is definitely something that's going to take a cautious approach.

Oh, one final thing. I probably won't be updating on Monday or Tuesday next week, just to give everyone a heads up. There might be something, but I'd say it's unlikely.

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