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Rumor: Microsoft prices new Xbox at $500 upfront, $300 with subscription

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For all of the myriad rumors, leaks, and highly suggestive business developments within Microsoft that illuminate what the Next Xbox will be, Microsoft remains mum about the specifics. The console may be called Durango or simply “Xbox.” It may be upgradable. It may have, at one point, been called Yukon. It may require a persistent Internet connection to even use. As the tech and entertainment industries wait with baited breath to see just how different Sony and Microsoft’s new machines will be, Microsoft’s next effort in the video game console business remains a mystery this spring. For the average player, though, only one question matters: How much will it cost?

According to Microsoft reporter Paul Thurrot of Supersite for Windows, the Next Xbox will cost between $300 and $500.

Rather than selling two differently priced models with different memory capacities as it did with the Xbox 360, Microsoft will offer the Next Xbox as a single model at two different prices. The box will be $500 on its own, but $300 with a contract subscription alongside it. Thurrot references internal documents about the device as his source of information. The Verge claimed its sources backed up Thurrot’s information.

There is plenty of evidence to support Thurrot’s claims in Microsoft’s current business models. The company began selling subscription subsidized Xbox 360s through its own stores and retailers like Best Buy in mid-2012. By signing up for a two-year monthly subscription to Xbox Live Gold, which is more expensive than the standard monthly fee, an Xbox 360 can be purchased for $99 up front. Microsoft has indicated multiple times that it would continue exploring subscriptions as a console pay model. The $500 price tag on the standalone model is also not terribly surprising. Competitor Apple has had great success selling devices like the iPad at higher price points alongside a subscription subsidized model.

Thurrot detailed other tidbits about Microsoft’s future in the console business. His documents seem to confirm the Next Xbox’s need for a perpetual connection to the Internet. A new Xbox 360 will also be introduced alongside the machine at just $99 sans subscription. 

These prices are notably higher than previous estimates. Baird Equity Research said in January that it expected Sony and Microsoft to follow the same multiple console options as the Xbox 360 and PlayStation 3 this year for their new consoles. The PlayStation 4 and Next Xbox would be offered in $350 and $400 packages. That may still be true.

If Sony is able to offer the base PlayStation 4 without a subscription attached to it for $400, undercutting Microsoft by $100, that would be a significant coup for the company. Sony struggled to sell the PlayStation 3 at $500 and $600 when it came out in 2006 against the $300/$400 Xbox 360.