The bundle would be available at Microsoft Stores in the United States and offer access to Xbox Live Gold "and possibly some additional streaming content from cable providers or sports package providers." The system would also include a two-year warranty.
Two years of the subscription fee in addition to the $99 console would add up to a total cost of $459. By comparison, Microsoft's current 4GB Kinect bundle is available for $299, and two years of Xbox Live costs $120. The report adds that an early termination fee will be required for customers who wish to cancel the subscription before two years have elapsed.
For now, this is only a rumor, and we've reached out to Microsoft for comment. If the new bundle does prove to be real, it's likely a lead up to Microsoft's E3 announcements, which are said to include a new music service but not a new console.
Would you buy a $99 Xbox 360 with a subscription fee? Let us know in the comments below.
Andrew Goldfarb is IGN's associate news editor. Keep up with pictures of the latest food he's been eating by following him on Twitter or IGN.