With all this in mind, there should be no question that Microsoft’s pitch for its eventual new console, right from the off, will be: This plays games, but it’s not for gamers any more than an iPad is just for gamers. Everybody watches TV, so everybody wants an Xbox to give them a heightened experience. If someday you find yourself caught in a downpour and duck into the nearest doorway and thereby accidentally enter a Microsoft store, you would be able to buy an Xbox on a cell-phone style plan, paying $99 for the box if you subscribe to two years of the Xbox Live service. That’s today. What if that’s the whole pitch for the next Xbox? What if Sony’s machine is $500 and Microsoft’s is $100? That would be the Bambi vs. Godzilla of console wars.
The fact that Xbox Live has been a paid service for so long makes this a viable option for Microsoft. People are already used to the idea of paying to play online, and most consumers are fine with paying more in the long run to pay less upfront for the actual device (see: smartphones).