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Report: Subscription-based $99 Xbox 360 coming soon

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The price of the Xbox might be about to come way, way down. But you'll end up paying more for it.

Confused? You're not alone.

The Verge, citing unnamed sources, reports Microsoft will announce a new Xbox 360 package next week that carries an upfront price of just $99. However, buyers will have to commit to a two-year subscription that is said to carry a $15 per month charge.

Sold at Microsoft retail stores nationwide, the bundle will include a 4GB Xbox 360 along with a Kinect sensor. The site says buyers will also receive access to the Xbox Live Gold service as part of their monthly fee and perhaps some additional streaming content from Microsoft's cable and/or sports partners.

Microsoft has not commented on the report, though The Verge says the official announcement will come next week.

Sounds like a screaming deal, right? Not so fast. The package, when totaled out, will cost users $459 over the duration of the contract, though they'll reportedly be able to pay an early termination fee to escape it. That's about $40 more than it would cost you to buy a 4GB Xbox 360/Kinect bundle today ($299) and two years of Xbox Live Gold service ($120).

The move, if it happens, looks to be another example of Microsoft's strategy to expand the Xbox beyond the gaming world. Rather than competing with the Wii (currently $140), upcoming Wii U (whose price won't be known until well after E3) and the PlayStation 3 ($250), the $99 Xbox is targeting home entertainment systems like Roku and Apple TV.

As the console world continues to feel pressure from the mobile and social gaming spaces, a dirt cheap console could breathe some new life into ailing game sales. Spending just $99 on an Xbox 360 leaves lots of room in most people's pockets to pick up a few games — like, say, Halo 4 or Call of Duty: Black Ops 2. The move also could build brand loyalty to the Xbox ahead of the next generation system's launch, which is expected to occur next holiday.

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