Microsoft cutting price of Xbox 360 by $100, matching Sony’s $100 price cut for PlayStation 3

Associated Press

By Barbara Ortutay

August 27, 2009

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Microsoft Corp. is slashing the price of the high-end Xbox 360 console by $100, matching Sony’s $100 price cut for the PlayStation 3 last week.

Now, both the Xbox 360 Elite and the PS3 will cost $299. The price cuts in both cases are worldwide, though the exact amounts vary by region depending on currencies.

Microsoft, which has had three versions of its Xbox 360 available at three different prices, also was to announce Thursday it is phasing out the mid-range, Pro, version of the console. It will be available for $249, down from $299, while supplies last.

The cheapest Xbox, the Arcade, which comes without a hard drive, will still cost $199.

The price cuts are effective Friday, said David Dennis, a spokesman for Microsoft.

Video game companies hope the price cuts will re-ignite sales in time for the holiday rush. For the bulk of this year, the industry has suffered from weak sales — hurt by the recession and lackluster game release schedules, which have kept consumers waiting to spend money on new titles.

The announcement from Microsoft leaves only Nintendo Co. without a price cut for the fall, at least for now. The Wii has cost $250 since its launch nearly three years ago.

Redmond, Wash.-based Microsoft has sold more than 31.4 million of the Xbox 360 machines globally, compared with 23.7 million PS3 machines sold by Sony Corp. and 52.6 million Wiis.

Analysis-Microsoft, Sony slug it out over living-room ‘hub’

Reuters

By Gabriel Madway

August 20, 2009

Microsoft Corp’s Xbox 360 and Sony Corp’s PlayStation 3 are locked in a battle to control entertainment in the living room beyond video games, a competition that is only growing more intense with the increasing popularity of digital distribution.

The two rivals have tens of millions of users, making them well-placed to capitalize if a critical mass of consumers begins to move toward a single “digital hub” that offers a buffet of media, including movies, TV shows, music and games.

The all-in-one hub has been touted for years as the future of home entertainment, but consumers have been slow to change, still opting to play their content on a variety of devices.

Although analysts caution that it is still early in the game, they say Microsoft — which had a four-year head start — is leading Sony, with steady revenue from paying subscribers and a strong slate of content deals, including partners such as Netflix and Facebook.

Although the companies do not provide sales data for their entertainment networks — Xbox Live and the PlayStation Network more than doubled year-to-date. He expects their combined revenue to top $1 billion in 2009, with Microsoft well ahead.

“We’re seeing the video game systems try to take control of our living room by offering all the different services and entertainment needs we have, all in one box.”

Xbox Live and PSN both offer movies, shows and videos, on top of game downloads. Neither offers music downloads, although users can play songs from their libraries.

Xbox Live Gold members pay $50 a year for additional goodies, including online multiplayer gaming and Netflix access. PSN offers online gaming for free.

But Microsoft has over the years amassed a dedicated group of gamers, said Wedbush Morgan analyst Michael Pachter, who estimates 11 million people pay for Xbox Live Gold.

“Microsoft made it simple — do online games, then move that online game player into watching movies and the next thing you know he’s going to be tuning in to Internet television. They’ve been very smart about it.”

David Cole, founder of research firm DFC Intelligence, said the PlayStation 3′s Blu-ray player broadens its appeal, but he said people are still mainly buying consoles for games.

“There are so many devices that you can use to watch video or listen to music … now I’ve got to go buy a game system to do that, and a fairly expensive one?”

RACE TO BUILD A BROADER PLATFORM

Many set-top boxes, along with Apple Inc’s Apple TV, offer movies and shows, but analysts say video games give consoles an advantage.

The Xbox 360 is the No. 2 home console in the United States, and sales are showing strength in a difficult economy. The PlayStation 3 is No. 3 and has struggled, but Sony just slashed its price to $299, which should help boost sales.

Nintendo’s Wii is the best-selling home console. Analysts say the Wii has a major opportunity to offer more content, given its huge customer base of families and more casual gamers.

But Nintendo has yet to position the Wii as a broader entertainment hub. “The focus is really about video games,” said Cammie Dunaway, Nintendo of America’s executive vice president of sales and marketing.

Microsoft and Sony are massive companies, with their game businesses constituting only one small part. But both emphasized their ability to leverage the strengths of the larger company to turn their console into the living room hub.

“I like our position in the race,” said Shane Kim, vice president of strategy and business development for Microsoft’s interactive entertainment business.

“This is the entire reason why Microsoft got into the Xbox business in the first place, why we made the strategic investment in Xbox Live … to build a broader consumer entertainment platform.”

He said recent deals with streaming-music service last.fm, pay-TV broadcasters Canal Plus and BSkyB show that the Xbox is becoming a one-top media center.

Xbox Live launched in 2002 and has 20 million members with an installed base of more than 30 million consoles.

At the same time, Sony said its sheer breadth of expertise across technology and content gives it the edge in a battle that will be more of a marathon than a sprint.

“We’re a software company, hardware company, music company, a movie studio,” said Eric Lempel, director of PlayStation Network operations for Sony Computer Entertainment America.

Sony’s PSN, launched in 2006, has more than 26 million members. There are 24 million PS3 consoles on the market, along with 53 million PlayStation Portables, which can also access the network.

Sony has said it plans to better utilize and expand the PSN platform. Lempel said the company has an array of devices — from Vaio PCs to Sony-Ericsson phones — that will be able to tap into the content on PSN, giving the company a broad reach.

Interview-Microsoft sees better Xmas game business in Germany

Reuters

By Christoph Steitz

August 19, 2009

Microsoft Corp expects its gaming-related business in Germany to improve in the 2009 Christmas season compared with a year earlier, a company executive told Reuters on Wednesday. “Regarding our gaming business, the 2008/2009 business year was our most successful overall,” said Oliver Kaltner, Microsoft’s head of entertainment for Germany, in an interview at the Gamescom video games trade show in Cologne, Germany.

“With regard to the upcoming Christmas season, we are planning to grow in an anti-cyclical way and expect that it (business) will be above the 2008 level.”

Microsoft does not break out sales figures for Germany in its financial reports.

The German video game industry is expected to grow 5 percent in 2009 to more than $2.9 billion, according to PricewaterhouseCoopers, bucking the economic downturn that has curbed consumer spending.

In the United States, video game equipment and software sales fell 29 percent in July. [ID:nLE229636]

Microsoft’s peer Sony Corp on Tuesday said it would cut the retail price of its flagship PlayStation 3 console — which competes with Microsoft’s Xbox 360 and Nintendo’s Wii — to spur console sales that have lagged those of rivals. [ID:nLI152101]

“The price cut for the PS3 does not surprise me at all. To us, this does not matter. We sell via concepts. But should we become convinced that we have to act regarding pricing, we will do so. At the moment, however, I do not see such a need.”

The cheapest version of Microsoft’s Xbox costs $200. Sony on Tuesday said the price for the PS3 would be lowered to 299 euros in Europe and $299 in the United States, as of Aug. 19.

Videogame Industry Revenue Takes a Fall

Wall Street Journal

By Ben Charny

August 14, 2009

Total U.S. videogame industry revenue fell more than expected in July on a sharp drop in console sales, NPD Group Inc. reports.

Analysts were bracing for overall U.S. videogame spending on games, consoles and accessories to fall around 15% in July. Rather, the U.S. market slowed at nearly twice that pace, dropping 29% from the previous year to $848 billion, NPD said. July was the fifth straight month of double-digit percentage declines in industrywide spending.

The results are likely to further pressure on console makers to cut prices, which most major manufacturers haven’t done in some time. Nintendo Co.’s Wii — sales of which stumbled badly in July — remains at its 2006 launch price, while several key Sony Corp. PlayStation consoles, which also underperformed last month, haven’t seen price cuts since October 2007, analysts say.

“Until consumers are sufficiently interested in buying consoles, it will be difficult for publishers alone to drive sales higher each month,” Wedbush analyst Michael Pachter wrote in a recent note.

Consoles were the biggest drag on the overall July revenue performance. Console revenue tumbled 37% to just under $281 million. According to NPD, July saw a 54% drop in unit sales of the Wii, and a 45% drop in the PlayStation 3. The results missed analyst expectations.

Microsoft Corp.’s Xbox 360 was the lone bright spot for consoles, eking out a modest 10% increase in unit sales. Yet even its relative success missed analysts’ expectations.

Microsoft ‘re-imagines life without walls’

Microsoft ‘re-imagines life without walls’

MIS Asia

Microsoft provided a fascinating glimpse into the near future in Singapore last week when they unveiled some of their product offerings to come in the next six to 12 months and an event they entitled ‘Re-imagine Life’. Of course, their next operating system, Windows 7, due for public launch on 22 October 2009, was featured, as was a peak at Office 2010, some new XBOX guitar-playing game offerings, plus a video showing the controller-less Natal video games system operated by human gestures. All very interesting to a gadget freak like myself.