The contract is laid out like this – Microsoft will sell you an Xbox 360 4GB with a Kinect sensor unit for $99. OK, so far so good. The $99 price is contingent on the aforementioned two year contract of $14.99 per month. Sounds reasonable on its face until you do the math. Let’s have a look see. Suppose I go out and buy a retail Xbox 360 4GB unit with a Kinect sensor. That would cost me $299. Then I buy a retail Xbox LIVE gold membership for two years. 12-month cards are $59.99 each, putting my 2 years of membership at retail cost at about $120. My final price, after two years, is about $420. Now let’s look at the subsidized bundle. I pay $99 for the Xbox 360 unit. I then pay $14.99 for 24 months. My final price for my two year contract is $458.76, which is over $30 on top of retail. After crunching these numbers, there’s really no incentive. And I’m not even counting sales on sites like Amazon and NewEgg, where I’ve seen 12-month gold cards go as low as $40. I’ve done a little additional math of my own factoring in early termination fees and the users’ total cost for cancelling every month for each of the 24 months. Simply put, there isn’t any short game play that would benefit the user financially to bring their total cost below the straight retail route.
I understand that this plan is structured for the “gotta have it now but don’t have the scratch” crowd. It’s the exact same thing with smartphone users who wouldn’t be able to afford buying a smartphone flat out, or extending the number of years on a car loan to make smaller payments. You’ll have the product now, but you’ll pay more in the long run. If you watch the sales and scour the interwebs, you can find cheap subscription cards and like-new used or refurbished units and spend less than $400 now, saving yourself more than 50 bucks in the long run.
Plus, two years? What happens if the Xbox 720 comes out and you’re still in year two of your contract?