“Xbox All Access” offers free hardware up front with two-year subscription [Updated]

[Update: Aug 27: Microsoft confirmed basically all of the details of last week's reports this morning, launching the Xbox All Access subscription plan as a way to get "Xbox One and 100 games [via Xbox Games Pass]" with "no upfront cost and one low monthly price."

As previously reported, subscribers commit to spending $22 a month for an Xbox One S or $35 for a 1TB Xbox One X console over two years. That subscription provides immediate access to the hardware, which subscribers can keep after the subscription ends, as well as Xbox Live Gold and Xbox Games Pass, which normally cost about $15/month combined on their own.

Subscribers will have to sign up for a Dell Preferred Account at a physical Microsoft Store location to take advantage of the offer, which is listed as "for a limited time only."  Subscribers who cancel before the two year period is up will have to pay the remainder of their balance.

As noted below, the subscription plan actually ends up costing less than buying the subscriptions and console a la carte, provided you remember to cancel after two years. Not having to spend hundreds of dollars up front for the Xbox hardware is also potentially compelling, though Microsoft notes it is "subject to credit approval."]

Original Story

Mobile phone customers in the US are already used to getting free or reduced-price hardware when they sign up for a two-year mobile service agreement. Now a report suggests Microsoft might be looking at a similar offering for its Xbox One ecosystem.

Windows Central reports that its sources inside Microsoft indicate that the company is currently planning to roll out an "Xbox All Access" plan, which would give users free hardware if they sign up for two years of Xbox Live and the Netflix-style Xbox Games Pass. All Access subscriptions would cost about $22 a month for a plan with Xbox One S hardware or $35 a month for the more powerful Xbox One X hardware, according to the report. Users would be able to cancel their subscriptions after two years and keep the hardware.

As described, an All Access pass would be a pretty good deal for consumers. Paying $528 over two years for the lower-tier All Access plan would actually cost less than buying a $230 Xbox One S then spending $360 on subscriptions (for a total of $590). For the higher-end plan, paying $840 over two years ends up slightly better than paying $500 for the Xbox One X hardware and another $360 for subscriptions ($860 total).

A way to stand out

Microsoft has long said it's more focused on finding engaged customers rather than inflating its relative hardware sales numbers compared to the competition. As Xbox division chief Phil Spencer said in 2015: "[Market] share is important, but more important than share is 'are we gaining new customers, are they buying games, are they engaged in the service.'"

Locking new users into long-term subscriptions could help with that engagement and help promote the year-old Games Pass service, which Microsoft says increases overall console usage among subscribers by 20%. In January, Microsoft committed to making all first-party Xbox One games available to Games Pass subscribers on their launch date, a move that helped Sea of Thieves reach a critical mass of two million players in the first week after its March launch.

With little to no upfront cost and instant access to hundreds of Xbox One and Xbox 360 games through Games Pass, All Access as described could help the Xbox One stand out a bit from the console competition.