According to The Verge, Microsoft is going to launch a $99 Xbox bundle next week which includes a 4GB Xbox 360 and a Kinect sensor. The deal works like a cellular phone plan: in exchange for the reduced up-front price for the hardware, you have to subscribe to XBox Live for 2 years at $15 a month. In terms of cost, it comes out to $459 ($99 + $360) which is a bit more expensive than if you bought the two seperately at retail, which comes out to $417 ($299 for 4GB Xbox 360 with Kinect + $118 for 2 years of Live).
Also just like a cell phone plan, Microsoft will charge customers that cancel their subscriptions early a termination fee. While it is unknown at this time whether there will be any extras included to sweeten the deal, or how much the termination fee will be, it will be intriguing to see if the cell-phone model works for game consoles. The bundle will be available only at Microsoft Stores.
Source: The Verge