Yesterday, we published a story that included a mention of Microsoft’s rumored subscription-based Xbox 360. At the time, Redmond wasn’t ready to share any details, but it seems that the offer has gone live. Xbox Spokesman Larry “Major Nelson” Hryb tweeted this:

 

Let me be blunt. This is not a good deal unless you absolutely need to spread your payments out.

If you go down this road, you’ll be committing to the following: $99 + $14.99*24 = $458.76

If you purchase a 4GB console with Kinect and two years of Xbox Live Gold from Amazon right now? $286.95 for the console plus $48.41 each for a 12-month Xbox Live Gold card. Grand total: $383.77. I’ve got an even better idea for you, though. Why not get yourself the Star Wars Limited Edition Xbox with Kinect. Amazon price? $399.99 and it comes with a 320 GB HDD (You’re going to want one of those, by the way). Throw in two years of Xbox Live (if you really must buy that much in advance) and you’re only at $495.82.

Here’s the thing that’s so confounding about this “deal,” though. I have no idea who would want it.

Gamers are going to be smart enough (even adopting this late in the life cycle) to know that DLC makes having a hard drive pretty important. They also will likely have done their research to know how much Xbox Live will cost them, and no one is likely to choose the month to month option. Even at the retail price of $60, you’re getting a full year for the cost of four months at the pay-as-you-go rate.

As for gift-givers (parents, grandparents, wealthy uncles, etc.), they aren’t going to understand why Xbox Live is important. No matter how pushy a salesperson will get, I can’t see a relative saddling themselves or the gift recipient with that recurring $15 charge for two years. If they ask the right questions, they’ll probably just make the smarter decision and purchase one of the $299 bundles and a single year of Xbox Live. Actually, scratch that, they’ll find out that you can purchase a Kinect separately later and won’t likely spring for the bundle. They’ll opt for a $199 4GB model or put the money toward one with a hard drive.

Microsoft is making a big mistake here. They’ve introduced another option into an already crowded marketplace. People become overwhelmed when there are too many choices. Analysis paralysis sets in and, rather than make a purchase, customers leave empty handed. Maybe that’s why Microsoft is trying this out in their stores first (with coupon):

 

 

Click to Enlarge

 

They’ll have the chance to try out different sales pitches, hear concerns direct from consumers and make adjustments. Ultimately, I don’t see this working out for them. It’s too muddled, and it’s not clear who the target market is. They either need to sweeten the pot or dump the plan all together. As always, don’t be a sucker. If a deal sounds too good to be true, it probably is. Do your research, know the costs and make a smart decision.

 

Michael Futter is the Managing Editor of @RipTen. You can follow him on Twitter at @mmmfutter.

8 COMMENTS

  1. All your other options are great if you have $400+ to spend up front for the console and XBL. It’s cheaper to buy most things up front with cash instead of spreading the payments out, but most people don’t do that. Most people on your other deals would be putting that on a credit card anyway, spreading the cost of their purchase out over time anyway, so I really don’t see the difference there except the payments every month would be going to Citibank or CapitalOne instead of Microsoft.

    Yeah, when you look at it the way you are it’s a “bad deal” but then so is getting on most cell phone plans which is basically what this looks like to me. You get the hardware for cheaper but you have to sign a two year contract for their service.

    •  It’s that kind of thinking “I’ll pay through the ass for crap, over a long time as long as I dont have to fork out money now!” that put USA into a recession. Glad to see it still kicking along strong. :S

      • I don’t think that’s what put the U.S. in a recession, that’s a huge oversimplification at best and downright misinformation at worst.

        As far as this being so horrible, I just don’t see giving customers an option on how to get their system as being horrible. Yeah, maybe YOU can afford to spend $400 cash to pick up a console, but other people don’t have access to that. Yes, spending the money NOW is always better than any payment plan. Does that mean that offering people this option is stupid? How is this deal worse than putting the $350+ combo on a credit card for 18% interest?
        As far as I’m concerned, telling people that this deal is “stupid” because you can get a better deal buying it in one go is elitist. Just because $400 is pocket change to you doesn’t mean that it is so to the rest of the world. What if this article was telling people that taking out a loan for a car is stupid when you can just pay cash for the thing and save thousands of dollars? What about a house? At least with this you’re paying for a service that you may be paying for every month anyway, whereas with any sort of loan or credit card payment you are simply paying the bank for the opportunity to borrow that money.
        It comes down to this for me, I don’t need this deal and I can afford to get my own damn Xbox if I wanted to and not even put it on a credit card. I don’t even have a credit card as I don’t believe in them. I’m an adult that is lucky enough to have a decent income so obviously this deal isn’t geared towards me. However, I’m not going to freak out about a company offering a more affordable way to purchase their product either.

        • You’re trying awfully hard to make it sound like this is a good deal for low income gamers, but it’s really not. This isn’t geared towards people who don’t happen to have enough disposable income to buy the console in one purchase, it’s geared toward people who don’t read the fine print, and don’t understand net present value or inflation. Microsoft is doing essentially the same thing that got credit card companies and payday lenders investigated for predatory practices. There’s nothing “elitist” about pointing that out.

          • I don’t understand how this can compare to payday loans or credit card companies. I would compare it more to cell phone plans, which is the norm for purchasing a new cell phone and if you don’t like those plans there ARE other options that don’t force a contract on you… which is no different here. 

            As far as it not being a good deal, I would say that it IS if you were already planning on getting a gold account on a month to month plan anyway, which a lot of people do. I mean, how is getting something for half price by paying for something you were already going to pay for a bad deal? Again, I’m not arguing the overall savings of getting a year of XBL at a time versus paying month to month or flat out purchasing an xbox vs. getting it on some sort of payment plan, that’s a given. It’s the same for a lot of subscription based plans that you can save money by paying in larger chunks. MMOs and car insurance come to mind. I don’t find it convenient to pay close to a thousand dollars for insurance once a year even though the insurance company charges me extra to pay month to month.  I’m willing to pay for the convenience of coming up with a little over a hundred bucks a month vs. trying to save up a thousand at the end of the year. Maybe I’m in the minority there, but I don’t think so.

            As far as it being predatory I don’t see it being any more predatory than than anything else that has a contract associated with it (again, I mainly think of this as being like a cell phone contract) and what company doesn’t love people who don’t read fine print? I wouldn’t even say this is “fine” print considering it’s right underneath the bold headline of the advertisement. How sneaky they’re trying to be putting their fine print right there in front of you. I guess they’re going for non-english speaking or illiterate people who can’t read the ad at all. Also, as far as I can tell the deal only seems to be for Microsoft stores, so it’s not like you’re going to walk into GameStop (who do much more evil things than this, in my opinion) or WalMart and just get straight fucked without even knowing it.

            I do not change my stance that saying “why pay month to month, pay for it up front or you’re an idiot” is elitist. Saying that you should just come up with around $400 bucks because it’s cheaper in the long run is exactly that, especially considering the added insult that buying the arcade version is stupid in and of itself. Why put things on credit or take out loans at all, those are ALL more expensive than just paying for stuff up front and again, I argue that most people “saving” money buy paying all the money “up front” all the stuff this deal offers would be putting on a credit card anyway, which totally defeats the purpose of the argument as you are no longer saving any money. Further more, if you put it on a credit card you are actually wasting money on the deal as the interest you pay is only going to pay the credit card and no longer going to be paying for any tangible service and I’m pretty sure that a credit card will charge you a lot more than $250 dollars if you decide to renege on your contract with them.Lastly, I would like it explained to me how inflation has anything to do with this, especially as a negative towards the deal, as perhaps I’m misunderstanding the use of it in this context.

          • You keep comparing this to other types of loans, but you’re completely missing the point. It’s not a horrible deal because it defers payment over a longer period of time just as if you were buying a home, a car, or a student loan. It’s a horrible deal because at say, a 5% interest rate, you’re paying about 16% of the total cost of the console just for the privilege of of spreading out your payments for 24 months. That’s compared to about 5-10% of the principle for your average home or car loan, or 0-2% for a commercial student loan. Also inflation is important when calculating the real interest rate, it’s not a negative or a positive towards the deal, it’s just parameter.

  2. Anyone know how does the contract works, or what the fines for early cancellation are? I’m wondering what would happen if a minor (who in some places can’t legally enter into a contract without parental consent) buys this and doesn’t make their payments.

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