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Microsoft: Subscription model 'pivotal' to Xbox business

Executive suggests contract model will be used for future hardware launches

Matt Barlow, Microsoft's general manager for interactive entertainment marketing, has said the mobile phone-style subscription model is "pivotal" to the company's business.

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Earlier this year Microsoft began offering an Xbox 360, Kinect and an Xbox Live Gold membership for an up front cost of $99, with subsequent monthly payments of $14.99 for the duration of a two year contract.

Although initially exclusive to Microsoft's own US stores, in June the trial program was extended to Best Buy and select GameStop outlets. In the coming weeks it will be rolled out to Wal-Mart, Toys R Us and all GameStop stores alongside new Xbox 360 hardware deals.

Speaking to the Wall Street Journal, Barlow indicated that the program has been a success and will be adopted again for future product launches.

"We wanted to see if we would get sustained consumer excitement and willingness from partners to get this in retail," he said. "This type of program is pivotal to our business."

In July, Xbox Europe executive Chris Lewis said the platform holder was looking at the possibility of launching a subscription model for Xbox outside of the States.

That same month, Wedbush Morgan Securities analyst Michael Pachter speculated that Microsoft's next console will go on sale for $99 with a monthly TV subscription fee.

"Console will have to be multiple purpose devices" he said. "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."

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