think of it this way, a console you walk into a store, sign a minimum-term contract for, take it home for just the price of the first months payment.

throw in the online service as a part of that monhtly fee so that everyone that is paying monthly for the console can play online, it means anyone that wants the console with the full online experience can afford to have one, even if they dont have the money saved to outright buy the hardware normally.

in that way, walking in to a store and buying the console outright, then paying for the service seperately, would be the same as "pay as you go", and paying monthly would be "contract", ive each console a unique identifier so that the company that has sold the contract can "disable" units that are either stolen or people who have opened a contract fraudulantly.

Then of course, throw in the ability to upgrade to the next model at a discunted price in the same way mobile contractors offer handset upgrades.

Instead of having shit like iphone 6 16gb, iphone 6 32gb and so on as tiered contract prices, you'd have SKU differences, so if it had happaned this gen you'd have a kinectless xbox one for $19.99 a month, or kinect bundle for $25.99 a month, then gamers bundle with the console and 5 launch titles for $30.00 a month.

given that generations for consoles usually last around 4-7 years, you wouldnt be limited to offering 12, 16, 18 or 24 month contracts, either, you could technically offer 48 month contracts where the monthly payments are drastically reduced, imagine being able to get the latest console WITH online paid for, for $7 a month.