Microsoft’s plans for $99 Xbox 360 in Europe cement the Xbox 720’s future as a subscription-based console

Microsoft is cagey. Cunning. Wily even. Even after 7 years, the company has found ways to keep the Xbox 360 a profitable business, even if its growth has slowed considerably. The average price of an Xbox 360 console is $285. Keeping the price of a machine that is ancient by entertainment industry standards that high is impressive. It’s also, according to some, damaged the console business to an extent that it can’t recover. Microsoft isn’t showing any signs of lowering the price of the Xbox 360 any time soon either. In fact, the price is going up even as it embarks on a campaign to convince consumers that the price has dropped. That campaign is going international as Microsoft brings its $99 Xbox 360 to Europe, signaling a permanent change in how the company does video game business.

Back in May, Microsoft introduced a new payment model for the Xbox 360 through its chain of Microsoft Stores. Like with mobile phones, customers pay just $99 up front for the console, but have to sign a two-year contract to the Xbox Live Gold service with monthly payments of $14.99. That’s $180 per year twice over, and contracts carry a nasty cancellation fee. Weeks after Microsoft started offering this plan at its own stores, retailers Best Buy and GameStop joined in.

VG247 reported on Tuesday that Microsoft is now targeting its second biggest continental market and is bringing the $99 Xbox 360 to the UK and other European countries.

“We’ll watch [the $99 Xbox] with interest, then we’ll decide if it makes sense for us to expand more fully in North America, globally or by region,” said Xbox Europe head Chris Lewis, “It’ll be very interesting to see how it works out. We listen to what the consumers are asking for and we experiment with different propositions in different markets. There are certain things we’ve done in Europe over the years, for example; a lot of our soft and hard bundling initiatives have ended up becoming global initiatives based on consumption patterns. The one you describe there, we’ll similarly track and see how that goes down. I think it’ll be very popular.”

“We just want to be where our consumers want us to be,” said Lewis.

The truth is that the $99 Xbox 360 and its attendant subscription package isn’t a new dawn for the Xbox 360 in Europe or the US. This 2012 campaign is merely a test bed for the Xbox 720, a device that is expected to be sold chiefly through subscription-based subsidization with the support of cable companies.

Microsoft, you be sinister.

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