Microsoft's innovative plan to sell subsidized video game consoles is now dead. According to a Wall Street Journal report, Microsoft quietly killed its $99 subsidized Xbox 360 offering last July.
The offering, introduced back in May 2012 allowed customers to buy a 4GB Xbox 360 console with Kinect bundled in for just $99. The catch was that customers had to sign up for two years of Microsoft's Xbox Live Gold subscription service at $15 per month. Xbox Live Gold is required for consumers to play online game or use apps through Xbox consoles and normally costs only $5 per month.
At the time the program launched many industry watchers considered it to be a test for how Microsoft might price its then-rumored next generation console. Such an offering would allow Microsoft to sell its new console at a low up-front cost, undercutting competition while ensuring a robust multiplayer community on the system. Instead Microsoft priced its Xbox One console at $500, putting it at a higher price point than Sony's $400 PlayStation 4 console.
Microsoft eventually rolled the offer out to other retailers such as Best Buy and GameStop, but it seems now that the pricing model just did not connect with consumers. The Journal report quotes a Microsoft spokesperson as saying the subsidized $99 Xbox 360 was simply a "pilot experiment." The report also cites an IDC analyst who claims Microsoft revealed last year that the program had simply been a way to milk sales of the Xbox 360 in the waning years of the last, long console generation.