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If they could partner up with some cable provider, and provide a subscription service where the nextbox is also your cablebox, I could see this catching on, or even offer big discounts for online tv services like netflix or hulu plus.

Without something like that though, I don't think the subscrption deals will sell well unless the total cost = cost of xbox + cost of xbox live. Its a win for microsoft because they are basically guaranteeing the user will be subscribed to live for at least two years, and it won't feel like a ripoff to the customer.

Basically the customer needs to be saving some money in the long run or at least breaking even for this deal to seem attractive.