Game over, Sony? Microsoft said to be working on $99 Xbox 360 + Kinect bundle with subscription

In a move that will surely stir up plenty of fanboy fervor, Microsoft is reportedly gearing up to announce a $99 Xbox 360 + Kinect package, which will be subsidized by a $15 monthly fee, reports The Verge.

Sources tell the site that the new Xbox 360 bundle could launch as soon as next week in Microsoft’s stores, and it will contain a 4 gigabyte and Kinect sensor (which retails for $150 on its own).  The $15 monthly subscription will last for two years and will provide access to Xbox Live Gold, and potentially access to streaming content companies as well. Even better, the bundle will include a two-year warranty.

We’ve asked Microsoft for comment, and will report when we hear back.

To purchase the same Xbox 360 + Kinect bundle now, you’d have to shell out $299, plus another $120 for a two-year Xbox Live Gold contract, for a total of $420. With the new bundle, you’d be paying $459 over two years — a difference that many consumers likely wouldn’t mind. The subscription bundle would open up the Xbox 360 to an entirely new market of users, including broke college students and families that could never justify the cost of an Xbox previously.

In comparison, Sony’s cheapest PlayStation 3 model is $250, and its cheapest bundle with its Move motion controller is $350. The Xbox 360 launched at a cheaper price than the PlayStation 3 (mainly due to the expensive Cell processor used in the PS3), and Microsoft has also managed to drop its prices much more quickly than Sony.

The news, if true, would be a fundamental change in the way the console market works. Typically, companies debut expensive new consoles that are heavily subsidized, with the hopes of making back money with game sales. As the years pass, consoles become cheaper to make, and companies are able to make a profit from the hardware itself. Given that the Xbox 360 is now almost seven years old, Microsoft can afford to be creative with its pricing model.

Not surprisingly, the Verge notes there will be an early termination fee for customers who break the contract. I don’t think Microsoft will have much of a problem with consumers dropping off though, as the low initial cost and reasonable monthly fee doesn’t give gamers much to complain about.

Photo via Scott Akerman