Selling the Xbox as if It Were a Cellphone

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Usually people have to plunk down two or three hundred bucks to buy a new video game console. Microsoft is about to see what happens when it tries to sell its Xbox game system more the way it would a cellphone, giving customers a break on the cost of the device as long as they commit to pay a monthly service bill.

The company is planning to offer a deal that will give customers an Xbox 360 and a Kinect game sensor for $99 if they agree to subscribe for at least two years to Microsoft’s Xbox Live game service at $15 a month, according to a person with knowledge of the plan who did not want to be identified as talking about an unannounced product. The plan, which was reported firstby the Verge, is likely to be officially announced as early as next week.

Microsoft declined to comment.

Xbox Live is one of Microsoft’s big successes in the games business. Subscribers to a “gold” version of the service can use a host of online gaming features, as well as get access to entertainment services.

While $99 sounds like a great deal for that package, customers who opt for it will pay a bit more over time than they would if they bought the same Xbox system and Xbox Live service the old-fashioned way. The Verge pointed out that the price of a current Xbox 360 and Kinect bundle plus the cheapest two-year Xbox Live subscription totals $420, while the new offer will amount to about $459 over the two-year term of the deal.

Still, cellphone carriers figured out long ago that subsidizing the cost of a handset could attract a lot of customers who are put off by the idea of a big upfront cash outlay, especially in the United States. For example, the starting price of a new iPhone 4S in the United States is $199 with a two-year wireless contract that can easily cost a customer well over $1,600 for the duration of the agreement. Buying that same iPhone without a two-year contract costs $649.

The new price plan is an experiment by Microsoft at a time when it could use a shot of adrenaline in its games business. During the first three months of this year, sales in its entertainment and devices division, which the Xbox is a part of, fell 16 percent as a result of weak customer demand in the games market.