An Xbox 360 subscription model may be disastrous

The new subscription business model for Microsoft's Xbox 360 console alleged in The Verge's exclusive report has me incredibly troubled.

In short, you’d pay $99 for an Xbox 360 and Kinect sensor (a bundle that normally retails for $299) and then pay $15 a month to subsidize the low purchase price. You’d get an Xbox Live Gold membership and some extra unannounced perks.

Holy shit.

I may be one of the only people on earth without a cell phone. After my last contract ran out and I tossed my dumb phone, I didn’t bother to upgrade or continue with cellular service. This was for two reasons: I like not being reachable at all times, and I do not agree with the disgusting antics of mobile carriers. They charge too much and are intent on providing as little innovation and openness as possible in order to erect their unfriendly but profitable business model.

Already, I hate paying for my Xbox Live Gold membership. I don’t use the exclusive services enough to justify the cost. Also, I find myself asking: “What am I paying for if Microsoft is intent on ruining my user experience in order to provide more space for ads?” I feel like they are asking me to pay for the privilege to be shown advertisements.

With few people left who want an Xbox 360 and don’t have one yet left, I suspect this will be a test for a new business model to be properly launched with Microsoft’s new system. How else can you explain such a late-game offer whose two-year contract window extends past the launch of the new system?

It’s a clever move from a business perspective. If you haven’t bought an Xbox 360 yet, you probably bought another video game system. Microsoft would like to fix that. Are you more likely to buy the next Xbox or next PlayStation if you have a year remaining on your Xbox Live Gold membership?

Touche.

I really hope that this isn’t the new business model. Through the subsidized pricing with contract model of cell phones, mobile carriers are able to keep the cost of handsets artificially high and ensure they get their money while presenting rock-bottom prices to the market. We all know how it works, and we still subject ourselves to it.

Picture this: no console price drops, additional service fees, price increases protected by contracts, and no secondary market for used products.

I am sure you will be able to purchase the console without a contract, but how many of us do that with cell phones? And what happens if console manufacturers decide to adopt the two-year upgrade cycle to make sure you never get off contract? That would completely restructure everything we thought we knew about the console video game industry. I suspect console manufacturers would like to sell new hardware every two years only providing incremental improvements. More hardware sales and less research and development. Quite the theory, but the mind boggles.

I can think of no other business model that is so successful for the companies and so terrible for the consumer, and if this works out, video games might just embrace it.

I never thought I would say this, but if this comes to pass, I may just stop playing console games. I did, after all, stop using cell phones.