As all eyes look toward Microsoft's announcement of the next generation Xbox and its bid to take on the
PlayStation 4 in the gaming space, the company also has an opportunity to broadly take over the burgeoning connected device space. How? By continuing to sell the Xbox 360 — but for a flat $99.99.
Yes, Microsoft has toyed with $99.99 Xbox 360 bundles in the past — but those bundles include a monthly Xbox Live Gold subscription that adds another $120 to the purchase. Instead, Microsoft should lower the price of its Xbox 360 starter pack to $99.99.
Think about it: At $199.99, the Xbox 360 is already one of the better deals out there. Yes, the console is seven — almost eight — years old, but it still plays great games. More importantly, Microsoft has access to some of the most compelling set of services for the living room. Netflix, Amazon Instant, Hulu Plus, Vudu, Comcast, HBO Go, Verizon, The CW, YouTube, Slacker, iHeartRadio, Vevo, Rhapsody and Crackle are just some of the services available for the Xbox 360 — not to mention the official Xbox Music and Xbox Movies & TV apps for buying or streaming content.
That puts the Xbox 360 in
Roku territory as having the most broad cross-device support and slightly ahead of the PlayStation 3 (to be fair, the PS3 also has a Blu-ray player but apparently I'm the only person who still likes to buy optical media for the picture, sound and extra features). At $99.99, the Xbox 360 could compete head-to-head with other connected devices for the living room, with the added benefit that it can play games.
When Sony released the PlayStation 2 in 2000, it became an instant hit, thanks in part to its backwards-compatibility with the PSX and the fact that it included a DVD player in an age when standalone DVD players cost as much as a PS2. Almost immediately, the PS2 became the best-selling DVD player of all time.
That kind of flexibility kept the PS2 selling millions of units a year. The Xbox 360 has that same kind of cross-user appeal, only this time in the age of digital and over-the-top services. Already more than 70% of current Xbox 360 buyers buy the unit primarily for its content offerings — not its games.
By selling the Xbox 360 for $99.99, Microsoft could cement its lead in the living room and help push the broader service idea around Xbox Live Gold — as well as any potential broader ecosystem plays with Windows 8, Windows Phone 8 and Xbox SmartGlass.
A few years ago, I hypothesized that the Xbox could become your cable box. That's increasingly becoming a possibility — not only because of agreements from MVPDs to bring their services to the platform, but because of the bigger shift towards OTT delivery. At $99.99, Microsoft could capitalize on the part of the market that hasn't migrated to a connected device for the living room.
The best part, from Microsoft's perspective, is that using most of these services would still require an Xbox Live Gold account. Those accounts aren't very expensive — you can get a 12-month Gold subscription for under $50 from Amazon and it gives Microsoft additional services revenue.
There will still be room in the market for the Roku and Apple TV devices of the world — but a $99.99 Xbox 360 makes the value proposition of those devices a lot less clear.
If Microsoft is serious about taking over the living room, it has the brand loyalty, the service and the legacy product to do just that.
