Microsoft: Smartphone-style contracts will be the Xbox 720’s bread and butter

xbox 720A new Xbox won’t be the only key to reigniting Microsoft’s stagnating game console business. According to the Windows 8 company, the mobile market will also redefine its living room entertainment business. How? Pricing.

The video game business is changing at speed. Video game retail sales have plummeted year-on-year over the course of 2012. The decline in disc-based game sales is reflective of an increasingly digital market; people are still spending on video games, they’re just downloading them in greater numbers and publishers typically don’t share digital sales data. The decline in devoted gaming machines is the real concern hidden in those poor retail numbers. Microsoft in particular is feeling the heat, with Xbox 360 sales in the last quarter falling 29 percent year-on-year. A brand new console might not reignite Microsoft’s game console business though. All devoted gaming machines are feeling squeezed: The Nintendo 3DS portable’s sales fell 18 percent in September. How do you fix this business?

By subsidizing sales with subscriptions, just like smartphones. Rather than charge $400 or $500 for a new game console upfront, Microsoft plans to sell the Xbox 720 at a low price with an accompanying subscription.

In a discussion with the Wall Street Journal, Microsoft interactive general manager for marketing Matt Barlow said that subscription programs will be the core of future Xbox releases. “This type of program is pivotal to our business,” said Barlow.

Microsoft began testing the subscription market back in May when it released a $99 Xbox 360 that through its chain of Microsoft Stores. The console is cheap, but it comes with a mandatory two-year contract requiring monthly payments of $14.99. That includes Xbox Live Gold, but at $180 per year, the device and service end up costing significantly more than if they were purchased individually at flat rates. Following that test, Microsoft began offering the same package at Best Buy, Toys ‘R’ Us, and GameStop.

Since Microsoft only sold 1.7 million Xbox 360s over the period when the program first went into effect, it clearly didn’t help the aging console. It didn’t need to though. All it needed to prove was that the model was viable for Xbox going forward into the next generation.

The question now: Who will be controlling and collecting that subscription fee? Will it be Microsoft or cable companies like Time Warner and Comcast as a number of industry analysts like Morgan Pachter suspect?

Gaming

Nvidia GeForce Now vs. Shadow: Which streaming service is right for you?

Nvidia GeForce Now and Shadow came out of the gate early in the race to conquer cloud gaming. GeForce Now is currently in beta, while Shadow is already available in most states. How do they stack up against each other?
Computing

Between Intel and AMD, these are the best gaming CPUs at every price

What are the best processors for gaming you can buy? You don't need to spend a fortune to get an amazing gaming CPU and now that AMD is competitive again, there are more choices than ever.
Gaming

Xbox One S vs. PlayStation 4 Slim: How do the revised consoles stack up?

Microsoft's new Xbox One S and Sony's PlayStation 4 "Slim" have bucked the generational gaming console trend. But which of these stopgap systems is worth spending your paycheck on?
Gaming

These are the must-have games that every Xbox One owner needs

More than four years into its life span, Microsoft's latest console is finally coming into its own. From Cuphead to Halo 5, the best Xbox One games offer something for players of every type.
Gaming

Xbox's app lets you access your console while away from home. Here's how

Microsoft's Xbox allows you to access your profile information and launch media content directly from your mobile device. Check out our quick guide on how to connect your smartphone to an Xbox One.
Gaming

From the very best to the worst, here are all the Pokémon games ranked

With Pokémon Sword and Shield en route to Nintendo Switch later this year, we decided to rank the first seven generations of Pokémon games from best to worst. Which generation made us want to catch 'em all the most?
Gaming

Police warn Raleigh locals of military cosplay at Rainbow Six Siege tournament

This weekend's Rainbow Six Siege Major esports tournament in Raleigh, North Carolina, prompted the local police to give residents a heads-up about cosplayers, who could come to the convention center in fake military cosplay.
Gaming

Nintendo is reportedly trading revised Switch console for older model for free

If you recently bought a Nintendo Switch, you may be eligible for a free exchange for a revised model with better battery life. The revised Nintendo Switch nearly doubles the battery life thanks to a new processor.
Gaming

Fortnite

Fortnite from Epic Games first arrived on PC as an early access game in 2017. Featuring a mode called Save the World, players could jump online with a group of friends to collect resources, build structures, and defend against waves of…
Deals

The best Nintendo Switch deals and bundles for August 2019

Looking to score Nintendo's latest console? We've smoked out the best Nintendo Switch deals, including discounts on bundles that feature must-have games like Super Mario Odyssey, Super Smash Bros. Ultimate, and Zelda: Breath of the Wild.
Gaming

Here's the Gamescom 2019 conference schedule and all the announcements we expect

Gamescom 2019 will be the site for four different presentations, including the next Google Stadia Connect event. Here is when you can watch the shows, and what to expect from each of them.
Gaming

Epic Games insists Fortnite B.R.U.T.E. is fun; #RemoveTheMech not happening

Epic Games said that the controversial B.R.U.T.E. vehicles are part of providing "a fun experience" to Fortnite players. It appears that the developer has no plans of listening to the #RemoveTheMech movement.
Gaming

Microsoft’s Xbox head debunks rumors of streaming-only console in the works

Xbox head Phil Spencer debunked rumors that Microsoft is working on a streaming-only console that will utilize the company's Project xCloud. Spencer also said cloud gaming will not soon replace traditional consoles.
Gaming

Sorry, no such thing as Nintendo Switch exchange program for upgraded model

Customer representatives said that those who purchased the old model of the Nintendo Switch after July 17 would be able to upgrade their console into the new model for free. A Nintendo spokesperson has now denied the exchange program.