Analysts: Next Generation Consoles Could Cost $99 with Subscription

by William D'Angelo, posted on 04 May 2012 / 4,356 Views

The possibility $99 Xbox 360 with a two year subscription plan could be a sign of things to come, says analysts. The biggest problem with new consoles is the price which can cost anywhere from $300 to $600. Console manufactures can sell their next generation console at a mass market price and it can come with a subscription for its online service. The model has shown to work with cell phones, so it can possibly work with video game consoles.

Analysts speaking with IGN had the following to say about the possibility of a cheaper next generation console subsidized with a subscription fee. "The model for next gen is interesting," said Wedbush analyst Michael Pachter. "It allows the hardware manufacturer to disguise the price of the hardware by bundling with an expensive service offering, not unlike the iPhone that retails for $499, but which costs only $199 with a two-year, expensive data plan."

"I think this could be a long-term strategy," said Mike Olsen, an analyst at Piper Jaffray. "It works with phones and tablets so why not game consoles? I definitely wouldn't be surprised to see Microsoft offering an Xbox Live partially subsidized Xbox 720 when it comes out and this could have significant interest from hardcore gamers that are upgrading to the next console and would have likely subscribed to Xbox Live anyway. Consumers like it because they save money on the hardware and Microsoft likes it because it gets people locked in for two years."

"It is an interesting business model and despite all the risks, I would argue that it would likely accelerate console adoptions, especially during the early phases of a hardware life-cycle when costs are well above $400," said Jesse Divnich from EEDAR.

When asked about the $99 Xbox 360 with two year subscription the analysts had the following to say. "I don't think it's that great a deal for consumers," said DFC Intelligence's David Cole. "You would be smarter to put the machine on your credit card. But if you don't have a credit card, it might make sense."

"My read is that this offering is aimed at the lower-income, late adopter, casual consumer, and I think it will convince many of them to buy a 360 instead of one of the other two consoles," said Michael Pachter.

"It is an interesting proposition, one that the cellular markets depend upon in its entirety," said Jesse Divnich. "If this is supported by every major retailer, I would anticipate a rather large uplift in Xbox 360 sales."

"Any perceived price reduction should lift hardware sales, I think even with a subscription pricing scheme," said Colin Sebastian at RW Baird. "Depending on the subscription price and term, this doesn't necessarily imply a price cut, but could broaden the potential Xbox consumer audience to the value end of the market. Given weak console sales, I think price experimentation is warranted. If this untaps a meaningful new consumer demographic then we could see Sony following suit."

David Cole did point out that "The Xbox 360 offer is just a rumor at this point. Console companies are always throwing ideas around to see how the market reacts."


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18 Comments

Nem (on 05 May 2012)

I dont like monthly fees. I refused to pay for Xbox live till this day and next gen im picking the console that gives me free online gaming and no monthly fees. For microsoft that means one less customer. For SONY and nintendo a new potencial customer. :)


ph4nt (on 04 May 2012)

Data plans and monthly fees mask the true price of a system and rely on the ignorance of the everyday consumer to succeed, which is actually not that difficult. If there is one thing people are terrible at, it is managing money. Any semi-intelligent person would realize you are getting ripped off, but sadly many consumers do not think too much,


Heavenly_King (on 05 May 2012)

I wonder what would happen, if a tourist buys the console and go to another country with it.... MUAHAHAHAHAHAHAHA!!! then if he does not pay the monthly fee, it does not matter!!! YEAH!! XD Unless they add some text in the contract that says: "Offer available for US residents only" :(


scorptile (on 05 May 2012)

first no used games and now this? i still keep saying they are trying to kill the console market between sony and microsft. microsoft makes lots of money off of the pc's so consoles to them isnt their money maker and to make people switch benefits them more. sony can keep building on its tvs and more consoles are an afterthought for both of them. eventually all that is gonna b e left to try and keep consoles alive is nintendo because that is their main business. yes they have handhelds but its an extension of the console market.


Demossky (on 08 May 2012)

Sony relys mostly on PlayStation and Making movies to make money but aren't much compared to the phone Market and computer market. Sony failed a tv market


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Heavenly_King (on 05 May 2012)

I guess Sony could do the same thing with PS Plus. :D


Moonhero (on 04 May 2012)

I will not be party to this noise. I think I'll find something new to do with my time.


Tridrakious (on 04 May 2012)

Well, looks like this is my last console generation if this is true. I will not pay subscription fees for my video games. I WILL NOT do it. I don't pay for Xbox Live, I don't pay for MMOs. I WILL NOT pay for it.


the_dengle (on 04 May 2012)

Or you could just get a Wii U, since Nintendo has already said they won't charge for online service.


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yo_john117 (on 06 May 2012)

Or you know...you could just buy the console in the normal way.


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APKenna (on 07 May 2012)

And it just became official folks!!!


invetedlotus123 (on 06 May 2012)

If they keep the option of someone paying full price and have total ownership over the hardware, there's not much a big problem. One thing I learn harshly with smartphones is discounts for subscriptions are a terrible idea.


yo_john117 (on 06 May 2012)

I would love something like this for next gen honestly.


DieAppleDie (on 05 May 2012)

Analysts? Really?


dr3b (on 04 May 2012)

I would go with whatever is cheapest in the long run. I would be more likely to buy from whoever has free on-line play. Quite sure the subscription deal would be an option, they would lose to many customers if required.


binary solo (on 04 May 2012)

So does that mean I wait for the price to drop to $0 with a 2 year sub before I buy? I never buy a console at launch price, so a $99 launch means there isn't much rome to move for my buying pattern. I think it might be an option, but not the only pricing structure. It's no different to buying on credit with paying a high interest rate, only this way the manufacturer gets the interest rather than some middle man finance / credit card company. I'd rather have the money got to Sony/Ninty/MS than the loan sharks.


D-Joe (on 04 May 2012)

trid you really act like they already said they don't let you choice


spurgeonryan (on 04 May 2012)

I think that you probably will Trid. When you are really wanting to play some amazing game.


Tallgeese101 (on 05 May 2012)

That is definitely something I would be interested in for the next gen consoles. For me £400 up front is a much bigger hurdle than say £600 spread over a 24 month contract. Same with smartphones.


kowenicki (on 05 May 2012)

I said this 2 years ago about the 360... its a natural progression for some LIVE gold members... keep subscribing and get a cheaper console. obvious.


happydolphin (on 04 May 2012)

Woooo, spoil me rotten!


happydolphin (on 04 May 2012)

Just kidding guys.


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