XBox One: Attach Rate and Hardware Subsidy

If the XBox One is fighting to become, at least in part, a glorified living room hub, what happens to the old business model of subsidizing the hardware and making the money back on games. If we see people buying the device as their HTPC of sorts, even as a partial reason, should Microsoft expect a lower attachment rate.

They're gonna make the money on services, advertising, games, subscriptions, DLC, microtransactions & other assorted bullshit you don't need but will buy anyway because you won't be able to sit in your living room without having that stuff shoved in your face constantly.

Making a profit on hardware won't be a priority - that one off transaction is chump change compared to what they can milk out of a captive audience over the next decade. This gen is all about who can most effectively turn living rooms into stores. They may or may not have to subsidise, but they totally would subsidise if it meant the difference between rapidly establishing an install base vs. losing it to the other company. Nobody can afford a bad start this time around.

I agree with Jeff's assessment on the latest Jar Time video. Doesn't make sense to launch that model now when they don't know how people will react to even the minor changes. They can play is safer and have a traditional model that milks the most money from early adopters, then after a year launch the subsidized model to get everyone else. I imagine this model will substitute the first price drop. But who knows maybe they will announce a subsidy when the price is announced and this will tie into a new price for Live.