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Xbox 360 Price Drop On the Horizon?

posted by Mark Fujii at 8:07 pm.

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With E3 right around the corner, it would definitely make sense that a company like Microsoft would eye this as a perfect opportunity to drop the price on their popular hardware, the Xbox 360. Not only would it increase interest in the slew of upcoming titles for Microsoft’s gaming machine, but it would also boost sales through the rest of the summer months and ensure that consoles are in homes before the insane launch of their Fall lineup (which includes huge titles like Fable 2 and Gears of War 2). Just today, a member on the webforum NeoGAF leaked scans of an “alleged” K-Mart advertisement flyer that showed that Microsoft is indeed slashing the price of their Premium Xbox 360 console from its normal retail price of $349.99 to $299.99 -a $50 drop. The reduction in price is significant, but will it be significant enough to boost sales?

While a $50 price drop may not be enough to tempt consumers in parting with their hard earned cash for a new video game console (especially with gas prices so astronomical and the economy in recession) it certainly does put a little more pressure on the competition. Sony’s Playstation 3 is retailing at $399.99, $100 more than the Xbox 360 after the price drop. Even with the Blu-Ray player as a built in function, the price drop will indeed highlight the now significant desparity in cost between the two products, and may help sway the decisions of potential, but indecesive, consumers. The Nintendo Wii should still be relatively safe. It’s managed to carve a niche in the market that makes it immune to the rivalry shared between Microsoft and Sony. Even with the Xbox 360 only $50 more than the Nintendo Wii, the Nintendo Wii’s mass appeal and family friendly games will ensure that Nintendo’s console will still be a sold out commodity throughout the summer in North America.

I also believe this price drop (if real) is not going to be exclusive to K-Mart only. In general, retailers are not legally allowed to modify the price on set-price items like gaming consoles, Ipods, etc. The manufcature sets the price (which retailers then buy from them for roughly 10% below normal retail cost) and while retailers are allowed to create incentives like free accesories, games, gift cards, etc. to attract customers, they’re not allowed to advertise their product as being cheaper than the competition. The reasoning behind this is so that corporations like Best Buy or Walmart can’t strong arm smaller retailers out of the market. Refurbished and used gaming consoles are the exception to this rule, and it’s part of the reason why retailers like Gamestop have managed to thrive in a time when most retailers are hurting.

So, if you’re thinking about getting a Xbox 360, keep an eye on the advertisements over the next few weeks. Who knows what might happen.

Mark Fujii: I'm your typical college student who plays too much video games. I also work as an electronic sales associate, meaning I sell Ipods and violent video games to your children when not trying to sneak off and play Super Smash Bros while the boss isn't looking. Oh, and I'm totally awesome. True fact.