The subscription model used for mobile phone contracts is “pivotal” to the future of the Xbox business, so says Microsoft’s manager for interactive entertainment and marketing Matt Barlow.

Barlow’s thoughts come after Microsoft tested a payment scheme which gave consumers the option of purchasing an Xbox 360 console, Kinect and Xbox Live Gold subscription for $99 up front, followed by 24 monthly payments of $14.99 over two years. That scheme was exclusive to Microsoft stores in the US, however the model has been a success and is now to be pushed across GameStop, Wal-Mart and Toys R Us stores.

“We wanted to see if we would get sustained consumer excitement and willingness from partners to get this in retail,” Barlow told the Wall Street Journal. “This type of program is pivotal to our business.”

The success of the scheme adds weight to the thoughts of analyst Michael Pachter who, back in July, said that the next console from Microsoft would launch for $99 and include monthly payments.

“I think Microsoft’s got it right [with their console strategy], and I think Sony will keep plugging away because they have an integrated strategy across all of their consumer electronic products. Microsoft, they have a strategy to take over the world,” said Pachter.

“Consoles will have to be multiple purpose devices, though. The Xbox 720, this is my prediction, is going to be your television as well [as your game console]. You’ll be able to tune into television through it.

“I’m pretty confident that in the US Microsoft is going to partner with a cable TV provider, so I expect that the console will be priced like a smart phone. I expect you’ll be paying $99 for the console with a cable TV subscription.”

Would you be tempted by a cheaper initial price, followed by ongoing payments?

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