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Report: Microsoft to undercut competition with surprise $99 Xbox 360 bundle

Taking a cue from mobile phones contracts, Microsoft may debut a $99 Xbox 360 bundle with a required two-year subscription contract as early as next week, positioning it as an entertainment box like Roku and Apple TV.
Microsoft will reportedly debut a new Xbox 360 and Kinect bundle with an initial cost of $99 -- and a subsequent $15 monthly fee for a two-year subscription -- next week. Such a price point would put the Xbox 360 well below those of contemporary game consoles. At $99, the Xbox 360 would be priced the same as media-centric devices such as Apple TV and Roku. In terms of traditional game consoles, it would cost the same as the twelve-year-old PlayStation 2. This sales model is unconventional for a video game console, and borrows heavily from standards set by mobile devices, which are sold below manufacturing cost and offset by mandatory contract subscriptions. Microsoft's new bundle is said to include a 4GB Xbox 360 system along with the motion-sensing Kinect peripheral. The subsidized $15 a month subscription service would include the traditional Xbox Live Gold membership perks, and could possibly also include access to streaming content from cable or sports package providers, according to a report from The Verge. Microsoft has not as of yet officially confirmed the existence of this bundle, though the above falls in line with information that Gamasutra has learned from its own sources. As with mobile phone and carrier contracts, it's said that consumers will be charged an early termination fee if they decide to break the contract before their two-year subscription ends. A backseat approach to games? With this move, Microsoft appears to be positioning the Xbox 360 as an entertainment-focused media box along the lines of Apple TV and Roku. This should come as no surprise: Gamasutra recently reported that Xbox 360 consumers are now spending the majority of their online time watching video and listening to streaming music, as opposed to playing online games. At this year's Consumer Electronics Show in Las Vegas, Microsoft CEO Steve Ballmer acknowledged that while the Xbox 360 is "still [about] games" currently, it is morphing into more of an entertainment hub, due in large part to the accessibility of its Kinect accessory. Microsoft's lineup of streaming video partners has been growing rapidly, and it has been working with these partners to address technological concerns such as bandwidth caps. In fact, cable provider Comcast recently acknowledged that content streamed through its upcoming on-demand video app for the console would not be counted toward its customers' 250GB a month bandwidth cap.

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