Official: Microsoft announces $99 Xbox 360 with two-year contract

Microsoft is trying something very new with its $99 Xbox bundle.

Confirming rumors reported last week, Microsoft today announced that it plans to sell a special subsidized Xbox 360 bundle.

The bundle, which runs for $99, comes with a 4GB Xbox 360, a Kinect, and a two-year $14.99 per-month Xbox Live Gold subscription.

There is, however, a catch: the deal can only be redeemed in a Microsoft Store, which could be a problem for those not living in the vicinity of one.

Here's the price break down, taken from our previous coverage:

The cost of the rumored Xbox subscription totals $360 over two years, a number that seems too apt to not have been intentional. Add that to the cost of the bundle itself and you’re paying $459 over two years, which is a bit higher than the $418 that customers would pay for a 4GB Xbox, Kinect, and two-years of Xbox Live.

The official confirmation also sheds light on the deal's early termination fee. Starting at $250 for the first three months of the contract, the fee decreases by $12 each month, eventually dropping to zero by the time the agreement ends.

Of course, while all of this comes a bit too late for those who already own an Xbox, the deal is certainly an attractive one for those who have yet to take the Xbox (or Kinect) plunge.