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2011 could bring price cuts for video game consoles

Kevin McGuire's picture

Consumers waiting for a wave of price cuts on the major video game consoles may not have to wait much longer according to an analyst.

Wedbush analyst Michael Pachter noted to investors this week that he expects to see video game giants Microsoft, Sony, and Nintendo to explore the possibility of reducing the suggested retail price for the Microsoft XBox 360, Sony PlayStation 2 and Nintendo Wii home video game consoles. "After maintaining console prices at historically high points throughout 2010, all three console manufacturers appear to us to be poised for price cuts in 2011," Pachter's note read.

All that is needed is for one company to announce a price cut on their product and according to Pachter it would appear that Microsoft would be most likely to make the first move. The XBox 360 was a the only home gaming console to sell more units in 2010 than it did in 2009 according to a recent review by NPD. A decision to drop the price of any of the XBox 360 packages, including those packaged with the Kinect bundle, could be made the first month n which Microsoft faces a drop in monthly sales compared to the same time of last year. According to Pachter that could happen as early as June.

History in the industry suggests that once one company, in this case Microsoft, reduces the price of their core system then the others in the competition will be soon to follow suit. Sony, which did not comment on the analysis by Wedbush, could counter a price cut move by Microsoft by introducing bundles of PlayStation 3 hardware and the new Move attachment, which enhances game play by adding motion detection technology to the PlayStation 3 similar to the way Nintendo uses the Wii controller. Doing so would allow Sony to avoid announcing a price cut, which could show a sign of weakness or wilting in the video game industry, and instead advertise an exclusive bundle package to make it easier for consumers to get started with the Move technology.

Nintendo already has the least expensive home console on the market and has delivered more Wii units to households in the United States than Sony and Microsoft have combined with their respective systems and few systems in the history of the company have been sold for less than $150 while no other home console was made available by the company. HULIQ previously reported that Nintendo will not release a new home system until 2012 so until then the Wii will be the only home unit available. Nintendo continues to stick by previous statements made by president Satoru Iwata that the company has no intention to reduce the price of the Wii. As far as HULIQ can tell, there should be no change in philosophy from Nintendo.

Current Retail Prices
Prices current as of February 3, 2011 according to Best Buy. Microsoft XBox360 units and Sony PlayStation 3 units are available with various storage capacities. Only the most common packages were included in this listing.

Microsoft XBox 360 (250 GB) - $299.99
Sony PlayStation 3 (160 GB) - $299.99
Nintendo Wii - $199.99

HULIQ will continue to monitor and report on the developments within the video game industry.

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