Welcome to Coffee Talk! Let’s start off the day by discussing whatever is on your (nerd chic) mind. Every morning I’ll kick off a discussion and I’m counting on you to participate in it. If you’re not feelin’ my topic, feel free to start a chat with your fellow readers and see where it takes you. Whether you’re talking about videogames, the possibility of Mariano Rivera’s career ending with an ACL tear, Demi Moore changing her Twitter handle from @MrsKitcher to @JustDemi, or flying to Sweden for a games conference, Coffee Talk is the place to do it.
One of the most interesting rumors this week was The Verge’s exclusive on Microsoft offering its Xbox 360 console with a two-year agreement. The company will allegedly sell the 4GB Xbox 360 Kinect bundle for $99 with a two-year service agreement. The monthly cost for Xbox Live Gold service would be $15 and a warranty would cover all two years of the service contract. Would you be interested in buying a console this way?
On paper, it looks like a compelling option. The up-front cost is low and the total cost of ownership isn’t much more than buying everything outright. Of course that’s all based on today’s prices. With a customary price drop in fall, the deal wouldn’t be as appealing. It will also be interesting to see what the terms of the contract are, particularly the early-termination fee.
For customers in certain countries — America and Canada immediately come to mind — the sales tactic is familiar. Mobile phones are sold with a subsidy and contract requirement. Perhaps some gamers would feel just as comfortable buying a console in a similar fashion.
Naturally, I want your thoughts on the matter. Kindly vote in today’s poll and let me know if you’d buy a console that required a two-year service agreement.
[poll id=”148″]
I could see this as a possibility in the next gen if the hardware will have to retail for a substantially larger upfront cost. Americans seem to love subsidies.
Would I buy it? No. I go weeks at a time without turning my consoles on unlike my phone.
The blackfriday lines for subsidized xboxes will be insane.
No, no, and NO. First of all, this looks like the beginning of a "no used games period" era, which I am strictly against. If they require online service for the new systems, then they have an excuse to add DRM to every game! Think about it; why haven't they put DRM on every game yet? It's because most people don't like it and refuse to pay for online in the first place. But if we are all forced to purchase online in the next generation, you can say bye to used and borrowed games for good!
Secondly, the cost of a 2-year subscription is nearly the cost of the system as it is now. The way this looks, they're merely saying "Can we raise the price, but allow you to purchase it with monthly payments?" I think gaming hardware costs too much already, and I for one am not ready to pay even more for my gaming.
Thirdly, if this were to happen, I'm positive that it would sell millions. Since I would not purchase these systems, I'd be out of the loop. I don't want the game industry to move on without me, but I refuse to purchase something like this for the reasons listed above. The only way they could get me to buy this is if they explicitly promised that there would be no DRM and no used-game hate. And judging by the attitude of big game companies right now, that will never happen.
Good point about the DRM. I didn't even think about that. That's enough to make me stay away from this deal altogether.
I was also going to point out that the XBL subscription is way overprced. I can go online and buy a one-year gold subscription for $50/year. That comes out to $4.17/month. That's almost three times less than what Microsoft will charge, which means that they value their warranty at $10.83/month or $130/year. Since that is obviously rediculous, it's safe to say that Microsoft is really charging you to finance the Xbox over the long run.
Unfortunately, there are probably a lot of idiots out there who will do this simply because the up-front costs seem so inexpensive.
-M
If I was forced to step away from xbox all I would be able to think of is "b-b-but….but…my gamerscore…nnnnooooo!!!"
Lame! If it pans out to be true. What I'd like to know is, is that going to be their model going forward? If so I will drop xbox faster than you can say rrod.
rrod
Haha, nice try, but I don't know if anything if official yet. Someone really wants me off Xbox haha!
Well I figured if someone else says rrod, then it's kind of like saying "biggie smalls" while looking in to a mirror, and RRODishere will show back up!
This is definitely not an option that I would prefer to see come true. Just because people subscribe to cell phone 2 year plans doesn't mean we like it, but we feel more forced in to getting a cell phone. A video game system is still much more of a luxury item than a cell phone, which means people will feel like they have more of a choice in the matter. If there is a choice than people I see plenty of people opting out of this choice.
I would agree with Lunias, in that I don't want the video game industry to move on without me; but that type of commitment is not something I want to add to my monthly pile of bills.
O.K. Let's do some more math!
Cost of Xbox console (w/gold subscription) = $300+$4.17/mo.
Microsoft's New Deal = $100+$15/mo.
Time that new deal will be equal or greater to console price (outright w/gold subscription)= 19 months.
So, if the contract is longer than approximately a year and a half, it would not be worth it to get the Xbox for $99+$15/mo. with a gold subscription.
New Deal = $385 in 19 months vs. $379.23 in 19 months if you buy the console and gold subscription outright (assuming you buy a 12-month subscription for $50)
So, for the last 5-6 months, Microsoft is making about $90 more dollars off of you extra than you would had you bought the console and XBL Gold yourself. The only other considerations are time and the warranty.
The question you have to ask yourself is: "Is a warranty and financing my Xbox over two years worth an extra $90?"
-M
P.S.- … How about them Heat? To all Knicks fans: Ha-HA!
I'm enjoying watching Lebron.
Me too!
-M
I would never buy a console if it required a contract. That is why I don't have a smart phone.
No way man, I've bought 3 360s one of each type (launch, elite, and slim) and they have ALL died on me, I am not buying another one at all let alone for a higher price.
If they are going to allow me to upgrade or will replace too if it goes out on me.
The rumor is that it will have a two-year warranty.
Hmmmm Idk I'd have to think about it
For full price retail analysis, the cost is EXACTLY the same.
4GB console with Kinect = $300
12 month Xbox LIVE subscription = $60
This equals $15 a month over 24 months.
You have no idea how many people don't bother looking for deals on their subscriptions. True, you can find LIVE for $40-50 for 12 months. Not everyone can afford over $400 upfront for a new console, Kinect, and a year of LIVE.
Yes, there will be a 2-year warranty on the console and the standard warranty on the Kinect.
Regarding DRM and the "online requirement": Console manufacturers can't enforce online DRM. Why? Internet service providers don't have 100% uptime and not everyone has (true) broadband.
This option isn't going to be the only way to buy a console. It's an OPTION. Stop thinking that since you already own a console that this is where things are headed.
Your math is incorrect.
Please read my post above (the one that says: "O.K. Let's do some more math!")
We will take your retail $60 gold subscription per year into account.
Microsoft's new "deal"= $100 (console)+ $15/mo. for 24 months (XBL Gold)= $460 total (or $19.17/mo.)
If you go to a retailer you can buy: $400 (console)+ $5/mo. for 24 months (XBL Gold)= $520 total (or $21.67/mo.)
They are nowhere near the same. If someone is planning to buy a console and two 1-year gold subscriptions at retail price, then yes, it would be worth it for them to do Microsoft's deal. For all those of us here, we KNOW that we can get a XBL gold subscription cheaper online, so the difference would be about $90 depending on how much you can get it for (assuming $50 or less). Also, Microsoft's deal is horrible for those who just want to be silver members and don't want to go online for any reason (like my brother-in-law).
I'm pretty sure most of us here know that this pricing model will probably be optional, but let's face it, no one really knows what these companies will do in the future and the video game industry is always full of surprises and missteps. We really don't know what the industry is going to do, so it's not a far stretch to think that maybe someday in the future, this pricing model will be the norm or even the only choice. Especially if you believe that digital distribution only will prevail. We all know that is where the industry seems headed now and so Microsoft's 2-year deal seems to fit in with that vision.
-M
Minor correction: the 4GB Xbox 360 with Kinect is $300.
I would argue that time value wise that $90 is immaterial is spread over 2 years.
I could see SOME consumers doing this but I'm not sure it will do better than the subsidized tablet market which is poor.
Oh yeah, I just thought of something. If they force you to sign a contract, could they throw in other stipulations in the hope that you wouldn't read them all? I've seen this a thousand times with Apps that get user permission to track their phone's data. Even certain Facebook pages require you to allow the app/group to post on your behalf, and people agree to those all the time.
They can't force you to sign a contract.