Fun for less: Xbox price falls

This won't surprise many close watchers of the video-game business. Microsoft is lowering the price of the Xbox 360, effective Wednesday, to lure more buyers to its console as the next edition of one of the most popular video games of the last decade — "Madden NFL" — goes on sale next week.

Leaked images from upcoming retail advertisements appeared on video-game enthusiast blogs as early as last month showing the price cuts, which Microsoft confirmed Monday: The low-end or "core" version of the console will cost $280, down $20; the midrange version's new price is $350, down $50; and, the high-end "elite" system will sell for $450, down $30.

Microsoft executives hope owners of previous-generation game consoles will be enticed by the new pricing.

" 'Madden' is a big title that we think is going to drive those guys back into the store and so having a price drop to time with that was really part of our strategy," said Aaron Greenberg, group product manager for Xbox 360.

The hardware changes and engineering improvements the company made to reduce an "unacceptable" console failure rate did not affect the timing of the price cut, Greenberg said. In July, Microsoft extended the warranty covering general hardware failures that had plagued the Xbox 360 and set aside $1 billion to deal with the problem.

The pricing strategy further separates the Xbox 360 from the Sony PlayStation 3, which saw a price reduction of its own and a new model introduced last month. A package including a PS3 with an 80-gigabyte hard drive and an off-road racing game went on sale for $600 Monday in the U.S.

The 60-gigabyte PS3 is selling for $500, down from $600, but only "until current inventory is depleted, which is predicted to be this fall based on current consumer demand," according to a Sony statement.

Nintendo's hot-selling Wii, at $250, undercuts both competitors.

Some analysts placed greater significance on last week's announcement that another highly anticipated game, "Grand Theft Auto IV," will be delayed until early 2008, missing the holiday season.

"In general people make way too much of pricing on game consoles, because it's not the price that sells the console, it's the game titles that are available," said Van Baker, a research vice president at industry analyst firm Gartner. "That's why the delay of 'Grand Theft Auto IV' is bad news for Sony. That was going to be the killer franchise on the PS3."

The delay hurts Microsoft, too, which was lined up to have "GTA IV" available on the Xbox 360 at the same time as the PS3.

"There goes part of the perfect storm they were talking about," said Billy Pidgeon, referring to Microsoft's earlier predictions about a holiday sales season lifted by the release of three hot titles, "Madden," "GTA IV," and "Halo 3" — a game exclusive to the Xbox 360. "But this [price cut] does set up the Xbox nicely for 'Madden,' and for 'Halo 3.' "

Microsoft's Greenberg said the delay of "GTA IV" could benefit "Halo 3," because the company will bring it to market next month with few distractions .

"I think all this does is officially declare it's a 'Halo' holiday," he said.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com