The rumored price cut of the Xbox 360 has come to fruition. In Europe, the prices for all versions of the Xbox 360 have been cut, and the Arcade edition is now, in terms of the pricing, competing with the Wii at £159.99. Retailers are pleased with the price cut, particularly its timing before the Easter holiday. Tim Ellis, HMV’s head, offered this statement to Games Industry:
“The timing is good - especially as we are now entering the Easter holidays trading period. A balance in timing is always important, but now could be a good moment to re-inject some momentum into the market following the post-Christmas lull,” offered Ellis.
Yet, the opinion of analysts regarding the price cut is divided. There still isn’t a consensus on whether the games industry will be adversely affected by the economic downturn. The real question is whether or not the price cut actually allows the 360 to compete with the Wii. Ed Barton of Screen Digest points out that there are other factors in the console decision:
“Naturally Microsoft hopes that consumers prove very price sensitive in their choice of games platforms – after all the Arcade model is now undercutting Wii by GBP 20 – however, hardware pricing is only one of many factors which influence consumers’ games hardware purchasing decisions.”
As I’ve discussed before in these pages, Microsoft’s efforts to appeal to the casual and mass gaming market have largely been unsuccessful. Though the price may be near the 360, I doubt many parents would walk into a retailer and look at the general marketing of the 360 and choose to purchase that console for the children for Easter. The primary problem with the 360’s marketing plan was that it was created before the ascension of the Wii, and so it focused its efforts on the hardcore gaming market. Microsoft clearly saw its competition as Sony and not Nintendo, and now that they realize that there is a larger market out there, they are struggling to keep up with the white horse that is Nintendo:
Microsoft has already attempted to attract a wider demographic through previous price cuts and software titles such as Viva Piñata and Scene It? but Barton feels these haven’t had the desired effect.
“There is yet to emerge conclusive evidence that the platform is appealing effectively to demographics outside the core gamer with whom the Microsoft platform has resonated strongly, particularly in North America,” commented Barton.
There is no doubt that currently Microsoft is in control of the hardcore demographic in the United States. I still believe that though this price cut might aversely affect the sales of the PS3 in Europe for a time, Sony will respond with an eventual price cut that will leverage the power of their Blu-Ray machine. David Cole, an analyst at DFC Intelligence, affirms that opinion:
“The Wii seems to be off in its own realm so I think the price cut is much more of advantage for competing with the PS3,” offered Cole.
There are still plenty of reasons Microsoft to be optimistic about its chances in Europe, but the company certainly realizes that any inroads it makes into the European market comes at the cost of PS3 market share and not Wii market share. I don’t know many grandmothers clamoring to play Gears of War 2, but I know more than a few who are looking forward to Wii Fit.
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