I have returned with more information about the rumored XBox 360 price drops and system reinvention. I think this topic alone has created much buzz, simply because everyone keeps waiting for the huge holiday sale, only to be disappointed with empty promises. I promised Black Friday and Thanksgiving Day sales for the XBox 360 and it happened, in spite of all the nay sayers trying to discredit the news bit (and spamming me on MySpace – thanks Brandon).
[ If you are like many console gamers and Halo 3 really excites you, you may want to read on! ]
With the first quarter of 2007 being mostly quiet, we see the same trends carrying on from 2006’s year-end news: PS3 still suffers from supply issues, forcing Sony to focus on their PS2. This leaves the next-gen arena mostly to Microsoft. Many say that this is the reason for which they will not be pushing price drops for a while, but I still beg to differ as it is much more complex than that. In fact, my colleagues at YouNewb have been dubious for a while until we got some mixed signals from certain Microsoft representatives. It turns out that the folks at Microsoft were telling consumers one thing and certain press/PR contacts another, essentially pitting us against each other!
The confusion is a simple marketing technique or ploy, depending who you talk to. You put enough contrasting messages out in the marketplace and people will start arguing about it. This sort of thing becomes viral in nature, thus spreading the word by way of the usual hype and buzz methods that online marketing is stellar for. Friends tell their friends and their friends tell their friends. Next thing you know, the news you passed along comes back to you but likely with spin. Microsoft has been brilliant in doing this.
I have been long professing that there will be major XBox 360 price drops in 2007 yet the impatient folks jump on the $399 and $499 (USD, of course) packages. These things have not been done consistently across all markets but Canada and the UK have seen huge price cuts on the Premium XBox 360 systems, while the US market sees great recurring promotions such as the ubiquitous 4 or 5-game bundles. The simple reality is that any marketer with even half a brain would see that now is the time to do massive price restructuring in order to penetrate more markets before the PS3 finally catches up. Now, you may say “don’t forget the Wii” but, for our purposes, Wii is in a market all on it’s own.
If you look at Microsoft’s official announcement, as alluded to on N4G.com, XBox 360 Core Systems will be discontinued to make way for Premium System price drops and a new HDMI-optimized system that will directly compete with the PS3. While the XBox 360 does support HD, I must admit that the difference between composite, component, and s-video output is still neglible for the most part, even on high-end HD TV’s. The introduction of HDMI will be a huge improvement. For the gamers that have been waiting for the right time to choose a next-gen system, that time may be upon us soon.
XBoxIC’s full article on Microsoft’s Project “Zephyr” reveals what this really means for the XBox 360: more price drop possibilities! We have to remember that price drops come in different forms. In Canada, many stores now offer a bundle that comes with four hot games, two controllers, and discounts towards other XBox 360 goodies, including $50 off XBox Live Gold subscriptions. While this is not a wide-scale thing and is more of a little-known secret, I keep getting reports from my contacts out there about this and other deals. In the states, we have similar promotions but not the $199-249 price tag as some are seeing out there. The point is, such bundles are awesome when you consider how much money you are saving overall since, really, you can’t enjoy the system without games anyway!
As you can see, the new XBox 360 design packs new features that are remniscent of the PS3 in many ways. I would say that, by May 2007, we will see more uniform price drops in all markets, especially in the UK and US. The Premium system will become the entry point for most and those that can spare the extra mullah can drop $400-500 USD to get the Zephyr. Either way you look at it, it’s more bang-for-your-buck than the PS3 offers right now. The sooner Microsoft does this, the faster they can see growth and spread out XBox 360 units.
Whatever side you may be on, you have to give it to Microsoft for being notorious at stealing ideas and making them “better”, or at least bigger. The old argument by some of the fanboys and less-informed is that Microsoft loses money per console sold. This may be the case but, on the other side, reporters like myself have Microsoft representatives telling us directly that they have packed price flexibility into their hardware platforms in order to be able to stay competitive. Regardless of what the truth is, this has created more buzz in the gaming community; moreover, more systems solds means more software sales and, in the end, that is what counts. Market penetration is the goal here, not merely making profits from hardware sales. Hardware sales are hardly ever profitable. Anyone that has been in the industry long enough knows this.
As Zephyr approaches, I want to see how the PS3 responds. Everyone I’ve spoken to seems to agree that the marketing folks at Sony are maintaining a very snobby position here. They act like they are not phased simply because they have a “better, more stylish product” and smart consumers will do the right thing. Essentially, if they do not adjust their strategies, they will simply alienate more gamers and only drive value to the Sony fanboys, pretentious gamers, and gaming snobs. I personally believe Sony will have to do more than just sell the style and push the fact that they have “the more complete system”. In the end, the core gamers want a complete gaming system, not a multimedia computer replacement.
Before I forget, let me stress that a new XBox 360 system would mean that you can play Halo 3 with better graphics than ever. Let’s face it: this game has been the favorite of those that love fast-paced, adrenaline-inducing action coupled with breath-taking graphics. There is a reason that this has been Microsoft’s flagship game for the XBox and continues to give them a very viral message to spread out. All the talk about the beta (and how to get on it) alone had people talking to their friends and spreading rumors up and down the grapevines. With HDMI becoming part of the equation along with a new black chassis for the XBox 360, the coolness factor increases tenfold and the viral marketing will surely continue to spread like a blazing fire. I don’t particularly like Microsoft as a company but, I must say, they are doing the right things now.
* The Gaming Console Wars: Initial Thoughts
* XBox 360 Holiday 2006 Price Drop
* The Gaming Console Wars: Marketing Analysis
* XBox Dominates the Multiplayer Arerna (For Consoles)
* Data Cable for XBox 360 to Ease Upgrades
* Price Drop Considerations – Aggravated Gamers
* Why Waiting for a Price Drop May Not Be Prudent