Microsoft Announces Contract-Based Xbox 360 for $99

Rumors began to pop up earlier in the month that Microsoft was looking to test the waters with a contract-based Xbox 360 for cheap, and today the rumors were confirmed.

Microsoft today announced that it will be offering a 4GB Xbox 360, Kinect included, for $99 with a two-year contract. Said contract has you pay up $14.99 a month for two years after the purchase, which brings the total cost in the neighborhood of $460. On the bright side, that $14.99 includes Xbox Live Gold.

Having to commit to a two-year contract isn’t the only catch to this $99 Xbox 360–the program will also have very limited availability. Microsoft says that you’ll first need to bring a coupon, shown above, to one of Microsoft’s stores, of which there are only about 16 in the United States. In other words, don’t expect to take advantage of this offer at, say, Wal Mart or GameStop.

In a statement to Joystiq, Microsoft says that its $99 Xbox 360 program is a “pilot” program which the company is using to experiment with a new pricing model. The offer is only available in the United States, and there’s no indication that it will be made available elsewhere.

“On May 7, we launched a pilot program at Microsoft Stores in the United States to test a new pricing model for the Xbox 360,” Microsoft said in the statement. “Specifically, the 16 Microsoft Stores in the U.S. will sell the Xbox 360 4GB console with Kinect for $99 with a two-year Xbox LIVE Gold commitment of $14.99 per month.”

Microsoft continued: “This pilot program aligns with our ongoing commitment to test new products and offers to understand how to best serve our customers.”

Do you think the contract-based Xbox 360 for $99 is a good plan, or would you prefer to buy an Xbox 360 at full price to save more in the longterm?