MS introducing subsidized 360+Kinect bundle for $99 + 2yr, $15/month XBLG contract

[dobwal]

The only way this deal is worth it is if MS promises to replace any defective 360 or Kinect with a brand new one at no cost to the subscriber or provides some other types of reward.

I can go onto Amazon right now and buy a 360 Kinect and 2 years worth of Live subscriptions with a credit card with a 18% interest rate with a $100 payment to that CC up front and pay the card off in 24 months for less than $15.00 a month.

In fact if I take advantage of the $245.00 360 Kinect deal (3.99 shipping) right now, I could use a card with a 20-30% interest rate. Using $100 dollars to pay for 2 years of Live up front would allow me to pay less than $15 a month over 24 months to pay off the credit card.

 

[Silent_Buddha]

My point is, if you are so financially unstable that you can't afford to scrape together $199 up front, what are the chances that you won't end up having trouble making your monthly payments later? Once you start paying $30 overdraft fees a couple times because there was no way to cancel a $15/mo charge that's automatically coming out of your account the deal gets exponentially worse. This is the crux of the backlash against all forms of predatory lending in the wake of the housing collapse. If you pay up front, even using real credit, 12 months from now if you lose your job or your car breaks down, or you get sick and miss a few shifts, you have the fucking option to not re-up your Live subscription and/or make smaller payments on your card instead of having your finances collapse around you. For the kind of people this deal is targeted at, $15 a month could be the difference between squeaking through and finding yourself overdrawn by hundreds of dollars.

If MS really wanted to make the 360 more affordable, maybe they should finally do a real price drop. Not this bullshit attempt to make it look more affordable while charging more.

Really? People have been doing rent to own for hundreds of years. And despite all that, those "financially unstable" people generally do just fine.

Interest rates on rent to own for electronics are generally around 20-40%. And I've actually seen rates far higher than that if you compare them to sales or online discounts. That makes this 12-14% for the X360 extremely cheap and reasonable.

Remember, Microsoft (or whatever company they are contracting through) are taking on the financial RISK that the customer may not continue to pay for the full 2 year term.

And if you consider that many credit cards have annual interest rates of between 12-24%, that makes this actually cheaper than buying an X360 and Xbox Live gold cards with a credit card if the credit card holder doesn't pay off the entire balance each month.

I guess that makes those credit card holders even more financially unstable.

Regards,
SB

 

[dobwal]

Really? People have been doing rent to own for hundreds of years. And despite all that, those "financially unstable" people generally do just fine.

Interest rates on rent to own for electronics are generally around 20-40%. And I've actually seen rates far higher than that if you compare them to sales or online discounts. That makes this 12-14% for the X360 extremely cheap and reasonable.

Remember, Microsoft (or whatever company they are contracting through) are taking on the financial RISK that the customer may not continue to pay for the full 2 year term.

And if you consider that many credit cards have annual interest rates of between 12-24%, that makes this actually cheaper than buying an X360 and Xbox Live gold cards with a credit card if the credit card holder doesn't pay off the entire balance each month.

I guess that makes those credit card holders even more financially unstable.

Regards,
SB

That is not true. You can take a credit card with a really bad interest and save versus using MS plan.

There are a reason why places like rentacenter charges $20 a week over a two year period for a PS3. First, the most credit worthy of people don't represent a large segment of consumers attracted to these types of plans. Second, a portion of your rentacenter payment goes to make up for the losses of other customers who defaulted on their contract and represent a loss.

If there were actual real demand for these type of services across the credit range, you would find retailers through out the spectrum of scum bags to reasonable dealers. But there is not, so most of these retailers deal with customers that require huge interest rates to be profitable.

 

[AlNom]

The only way this deal is worth it is if MS promises to replace any defective 360 or Kinect with a brand new one at no cost to the subscriber or provides some other types of reward.

There's a 2 year warranty included instead of 1 (end of the original article).

 

[Silenti]

I was completelhy overstating when I typed "laughed off the boards". Was just my sense of humor at the moment.

If they can attract people to this style of payment now, it may well be where everything media related is going to try to go in the future anyway. They establish this alternative pricing now for the exisintg 360 at the end of its life cycle. Let us say instead of selling the new Xbox at 399 and 499, you pay 100 or 200 down, 20$ a month for 2 or 3 years and sign up for x# of months of service? How may boxes would that sell when you no longer have the high cost of entry? Consider further that instead of outright subsidizing of the box, you get a long cash stream that starts immediately. This would mean even more when people are doing a lot more than only playing games on it.

 

[Silent_Buddha]

If there were actual real demand for these type of services across the credit range, you would find retailers through out the spectrum of scum bags to reasonable dealers. But there is not, so most of these retailers deal with customers that require huge interest rates to be profitable.

You mean like Sears? or JCPenny? Or Best Buy? Or Amazon? Or many other retailers? All of which I believe offer either credit cards or financing? Sometimes up to 24% annual interest rate.

Interest rate which is, BTW, compounded monthly unlike the flat interest you have with the X360 deal.

And yes, the rent to own electronic stores usually are quite high priced since they don't always do credit checks and when they do, they still rent to people that are an obvious credit risk. Which means they are at greater risk of a customer defaulting. The flip side is that if a customer can't make the payments then they can attempt to recover the product and then rent it out to someone else for the full rental period. There's no details as to whether MS or the company they contract through will do a credit check prior to approving the sale (similar to cell phone contracts).

As to whether rent to own shops are operated by scum bags or not depends on how you view it. You either look at it as charging an unreasonable interest rate to get something. Or you view it as giving people with bad credit an opportunity to rent something they could not otherwise afford, possibly own it, and possibly increase their credit rating in the process.

Regards,
SB

 

[dobwal]

You mean like Sears? or JCPenny? Or Best Buy? Or Amazon? Or many other retailers? All of which I believe offer either credit cards or financing? Sometimes up to 24% annual interest rate.

Interest rate which is, BTW, compounded monthly unlike the flat interest you have with the X360 deal.

Regards,
SB

Those companies extend you a credit line not a subscription plan. With a credit line or card how much I pay in interest is determine how long I as the consumer choose as long I make the minimum payment.

Subscription plans means you get locked into the profit that MS wants.

And your post doesn't change the fact that a card with an average to poor interest rate (thats compounded monthly) will save you money versus MS's plan. How high your interest rate can be is dependent on how savvy you are as a consumer.

All MS is doing is co-opting the interest you would normally pay to your credit card company (subscription will probably be tied to a CC) while providing no flexibility to pay off early and more cheaply. Its not a great deal.

 

[Silent_Buddha]

Those companies extend you a credit line not a subscription plan. With a credit line or card how much I pay in interest is determine how long I as the consumer choose as long I make the minimum payment.

Subscription plans means you get locked into the profit that MS wants.

And your post doesn't change the fact that a card with an average to poor interest rate (thats compounded monthly) will save you money versus MS's plan. How high your interest rate can be is dependent on how savvy you are as a consumer.

All MS is doing is co-opting the interest you would normally pay to your credit card company (subscription will probably be tied to a CC) while providing no flexibility to pay off early and more cheaply. Its not a great deal.

Sure and in that case then for you it's obvious that a credit card would be better. And it's likely that anyone savvy enough to pay their credit card balance off at the end of every month will already know this and hence avoid the X360 contract plan.

For the vast majority of credit card owners who pay the monthly minimum most of the time or just above it, they would save significant cash by going the MS subscription route.

Consumer choice, you've got to love it.

Regards,
SB

 

[dobwal]

Sure and in that case then for you it's obvious that a credit card would be better. And it's likely that anyone savvy enough to pay their credit card balance off at the end of every month will already know this and hence avoid the X360 contract plan.

For the vast majority of credit card owners who pay the monthly minimum most of the time or just above it, they would save significant cash by going the MS subscription route.

Consumer choice, you've got to love it.

Regards,
SB

That saving comes with maintaining a balance. The balance being the cost minus $100 for both Live and the 360 Kinect or buying Live with cash and putting just the cost of the 360 Kinect on your card.

And if you are a consumer who pays the minimum on a card that already has a balance while subscribing to MS's plan on that card, will mean you are paying double.

You will pay the interest that MS is co-opting with the subscription plan as well as the credit card interest on the principle of that $15 MS monthly charge that is not covered by that minimum payment.

 

[joker454]

If MS really wanted to make the 360 more affordable, maybe they should finally do a real price drop. Not this bullshit attempt to make it look more affordable while charging more.

I think you're missing one massive benefit from this, in that if it proves succesful it could mark the return of the $500 console. We all saw what a non subsidized $500 console did to Sony, it almost killed them in the gaming world, it's just not feasible. But if this subsidy idea takes off them it makes it a possibility again so everyone benefits by having a potentially much stronger console than they would have otherwise had.

Or worded a simpler way, is spending an extra $40 worth it to you to get a much stronger console? I think this is a great idea that every console gamer would benefit from, even if they didn't take advantage of the offer, because that $40 overpayment potentially lets Microsoft design their next machine as a $500 box rather than a $300 box.

 

[Silent_Buddha]

That saving comes with maintaining a balance. The balance being the cost minus $100 for both Live and the 360 Kinect or buying Live with cash and putting just the cost of the 360 Kinect on your card.

And if you are a consumer who pays the minimum on a card that already has a balance while subscribing to MS's plan on that card, will mean you are paying double.

You will pay the interest that MS is co-opting with the subscription plan as well as the credit card interest on the principle of that $15 MS monthly charge that is not covered by that minimum payment.

Not really because how often does a person buying electronic devices pay partly with cash and partly with their credit card?

The choice is going to be...

X360 Kinect + 2 years Live Gold cards with cash...
X360 Kinect + 2 years Live Gold cards with a credit card...
X360 Kinect + 2 years Live gold on the MS subcription plan...

Regards,
SB

 

[Silenti]

I think you're missing one massive benefit from this, in that if it proves succesful it could mark the return of the $500 console. We all saw what a non subsidized $500 console did to Sony, it almost killed them in the gaming world, it's just not feasible. But if this subsidy idea takes off them it makes it a possibility again so everyone benefits by having a potentially much stronger console than they would have otherwise had.

Or worded a simpler way, is spending an extra $40 worth it to you to get a much stronger console? I think this is a great idea that every console gamer would benefit from, even if they didn't take advantage of the offer, because that $40 overpayment potentially lets Microsoft design their next machine as a $500 box rather than a $300 box.

This was one of that points I was attempting to make previously. The fears of underpowered consoles to reach a low opening price point w/o subsidizing has run rampant for what, 2 years here? The last batch of rumors certainly didn't help that. This would allow a lower cost of entry, no subsidizing or little subsidizing and a revenue stream. I expect digital download game rentals to follow as well.

 

[AlphaWolf]

Those companies extend you a credit line not a subscription plan. With a credit line or card how much I pay in interest is determine how long I as the consumer choose as long I make the minimum payment.

Subscription plans means you get locked into the profit that MS wants.

And your post doesn't change the fact that a card with an average to poor interest rate (thats compounded monthly) will save you money versus MS's plan. How high your interest rate can be is dependent on how savvy you are as a consumer.

All MS is doing is co-opting the interest you would normally pay to your credit card company (subscription will probably be tied to a CC) while providing no flexibility to pay off early and more cheaply. Its not a great deal.

The assumption being that the price being $99 plus $15 is fixed in stone. Compared to retail MSRP prices, a $40 cost for a 2 year finance plan isn't really out of line. There's no reason to believe they can't also discount a financing plan just as well as prices are discounted at the stores.

 

[dobwal]

The assumption being that the price being $99 plus $15 is fixed in stone. Compared to retail MSRP prices, a $40 cost for a 2 year finance plan isn't really out of line. There's no reason to believe they can't also discount a financing plan just as well as prices are discounted at the stores.

Its highly unlikely that a company that gets a consumer to obligate themselves to pay at a certain rate for a certain length of time is going to alleviate those terms when the prices of their product change.

You see this happen in business to business relationships but in terms of general retail consumers thats not typical practice. Look at cable TV. Even when subscribers aren't bound to a contract, many cable TV companies literally force the majority of their customers to cancel just to take advantage of deal offered to new subscribers.

The manufacturing cost of 360 today can't be retroactively changed in the future, so why would MS provide you with new cheaper monthly subscription a year later just because 360 manufactured in 2013 are cheaper to build and allow for better deals? You don't have a 2013 360, you have a 2012 360 that MS is still recouping the cost of its manufacturing from you.

 

[AlphaWolf]

I'm not talking about changing the terms of an already signed contract. I'm talking about the price actually being what you think it might be at the time of signing. You're comparing discounted prices to the full price rumored plan.

 

[Shifty Geezer]

A UK rent-to-own price:
http://www.brighthouse.co.uk/gaming/xbox-360-250gb-kinect-bundle/

29.9% APR. And AFAIK from Googling the name of the store, they are doing well in the recession. Maybe someone can link to equivalent US stroes for comparison? Seems to me though that for this sort of finance MS are offering a great deal.

 

[dobwal]

Not really because how often does a person buying electronic devices pay partly with cash and partly with their credit card?

The choice is going to be...

X360 Kinect + 2 years Live Gold cards with cash...
X360 Kinect + 2 years Live Gold cards with a credit card...
X360 Kinect + 2 years Live gold on the MS subcription plan...

Regards,
SB

Who buys 2 years of Live subscriptions at a time?

Even if I did charged two years of Live for $100 and a $299 Kinect 360 it would cost me about $20.31 a month over 24 months.

If I put the initial $100 on that same card for a subscription it would amortized over 24 months at 5.09 a month + 15.00 monthly subscription fee would equal $20.09 a month.

The problem with the subscription plan is that the only thing you could pay off early is the $100 up front cost charged to your card. You're stuck paying the $460 regardless with no chance to cheapen your purchase while I have every opportunity to reduce that cost to as little as $399.

Your cost is fixed while mine is not. I can save money by shopping for deals on the 360 Kinect as well as the Live subscriptions. I can pay more monthly to reduce my cost across the total purchase while you can only affect the interest you have to pay on that initial $100. I can transfer my balance to a card with a cheaper interest rate, while if you transfer to a cheaper card it will only affect that initial $100 but your $15 a month fee will still be the same.

 

[dobwal]

I'm not talking about changing the terms of an already signed contract. I'm talking about the price actually being what you think it might be at the time of signing. You're comparing discounted prices to the full price rumored plan.

Comparing discounts I can get right now versus a plan price that rumored to launch next week is wrong? How?

Are retailers discounts going to suddenly change next week or will MS suddenly change the rumored price plan over the next 3 to 5 days to deal with today's discounts?

Would you rather we discuss this topic with arbitrary price points and time lengths based on the individual whims of the poster?

 

[RancidLunchmeat]

I think you're missing one massive benefit from this, in that if it proves succesful it could mark the return of the $500 console. We all saw what a non subsidized $500 console did to Sony, it almost killed them in the gaming world, it's just not feasible.

I don't think there's a factual basis to come to that conclusion at all.

There was a quite an interaction in the horrific PS3 launch, the price point being just one of them. The facts that they launched significantly later than the 360, that their product wasn't superior to the 360 (at least not so that it was visually apparent), and that they lagged significantly behind Live in terms of the on-line offers were all contributors to the slow uptake in PS3 sales.

Who's to say that if the PS3 was obviously a superior console, that launched in tandem with the 360 and supported a rich and easy to use social interface that people wouldn't have purchased it even at the higher price?

 

[AlphaWolf]

Comparing discounts I can get right now versus a plan price that rumored to launch next week is wrong? How?

One is MS's suggested retail price, the other is retailer discounted. DUH. It's akin to complaining that Sony's last price drop on the PS3 wasn't a price drop at all because retailers had been offering that price in advance of the drop.