Pilot program for $99 Xbox 360 bundle introduced at Microsoft Stores

Microsoft has formally announced its $99 Xbox 360 and Kinect bundle -- which undercuts the prices of rival systems by requiring a two-year paid subscription -- as a part of a pilot program at its retail Microsoft Stores. This bundle is not only cheaper than other current generation home consoles, it's priced to compete against other media-centric devices like Apple TV and Roku. Microsoft has had success positioning Xbox 360 as an entertainment hub, as more than half of consumers spend more time with the system's media services than its games. Microsoft will likely be able to attract consumers who've passed on purchasing an Xbox 360 before due to its initial high cost. For comparison, a standard 4GB Xbox 360 and Kinect motion-sensing accessory bundle (the subscription bundle also includes a 4GB console) sells for $299. Nintendo's Wii sells for $149, while Sony's 160GB PlayStation 3 model is priced at $249. With this subsidized bundle, consumers must sign up for a two-year contract and pay a $14.99 monthly fee for Xbox Live Gold membership (coming out to $360 after 24 months). If they decide to cancel their subscription before their contract is up, they must pay an early termination fee that can run up as high as $250. So far, the deal is only available through Microsoft's 16 retail stores. The company said it's testing the bundle's new pricing model as part of a pilot program, and will study how customers respond. It hasn't yet discussed plans to bring the bundle to other retailers. Microsoft also hasn't said if it will offer free access to streaming content from cable or sports package providers with the bundle, as was rumored when reports of the bundle's existence emerged last week.