Rumor: $99 Xbox bundle to be subsidized by monthly subscription

Americans generally dislike having to pay for something upfront. Look no further than the popularity of the smartphone. While "unlocked" phones can go upwards of $600, most opt to sign two-year contracts with providers to get the cost of the device subsidized. According to a new report, Microsoft may be exploring the same kind of business model for Xbox 360 and Kinect.

The Verge claims that Microsoft is planning to launch a $99 bundle that will include a 4GB console with Kinect sensor. That bundle currently retails for $299--so how is Microsoft cutting the cost so significantly?

In order to get the discounted Kinect bundle, customers will have to agree to a two-year subscription. "We're told that the two-year subscription will provide access to the Xbox Live Gold service and possibly some additional streaming content from cable providers or sports package providers," the report details. The subscription would supposedly cost $15 a month.

It's unclear what additional value the $15 subscription would include, but over two years, the "discounted" $99 bundle would end up costing more than just buying the same bundle without the contract. Over two years, the subsidized bundle would cost $459 versus $419--and those costs will only increase over time.

When contacted for an official response, a Microsoft spokesperson told us: "We don't discuss plans about our pricing, and we've made no announcements."