Microsoft (NASDAQ:MSFT) is planning to sell $99 subsidized Xbox bundles directly to consumers, which would include the Xbox 360 console, the Kinect sensor and a two-year Xbox Live subscription package at $15 a month. This seems to be a marketing ploy to get as many consoles out in living rooms across the world as it can, before it starts focusing on rolling out its entire portfolio of online content. [1]
Check out our complete analysis of Microsoft
Subsidized Xbox bundles part of bigger content play
The cost of the bundle adds up to $459 over two years, which is slightly higher than the amount customers would pay if they purchased the Xbox, Kinect and an Xbox Live subscription separately, so Microsoft isn’t compromising on its profit margins here, unlike Amazon.
With the Xbox bundle, Microsoft plans to go up against Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG) and Amazon‘s (NASDAQ:AMZN) TV/online streaming content offerings, and it may have a significant lead already. It is focusing on making Xbox the complete entertainment hub, adding multimedia content and other services to Xbox Live. This could generate a significant amount of revenue for Microsoft in the coming years as digital content across smart devices becomes pervasive and the market expands, going forward.
Entertainment offerings and devices account for nearly 4% of Microsoft’s $40 Trefis price estimate, which stands nearly 25% above its current market price.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:
