Could a $100 Xbox 360 Revitalize Hardware Sales? - The UpStream

Could a $100 Xbox 360 Revitalize Hardware Sales?

posted Sunday May 6, 2012 by Scott Ertz

Could a $100 Xbox 360 Revitalize Hardware Sales?

It is no secret that gaming hardware sales are down. Nintendo posted its first ever loss this quarter but, in large part, to lackluster hardware sales. They sold just under 10 million Wii consoles compared to 15 million this time last year; that is a 33% drop in hardware sales. The sales numbers on the 3DS are, at this point, legendary, and it is difficult to recover from.

In addition to Nintendo's sales problems, Sony's PS Vita has not had the sales that executives expected. A large part of the problem for handheld gaming is the proliferation of smartphones and the amount and quality of gaming available on those platforms. For example, the Asphalt 6 that came with with the BlackBerry PlayBook OS2 upgrade is on par with any racing game available on the 3DS or Vita.

While sales for dedicated gaming hardware seem to be slipping, and Nintendo and Sony seem caught off guard by this slip, Microsoft seems to have had a plan in place to deal with it. Their plan has been to emphasize the media aspects of the console. In fact, they affected statistics for consoles with this strategy.

While it has been a winning strategy until now, it won't last forever. Will a cheaper console be their next move? Hit the break to find out.

As we know, selling more consoles won't come from new hardware, at least not this year. Microsoft seems to have learned a lot from their Windows Phone 7 push, though, including how to price a device. Currently, there is discussion about a $99 Kinect bundled Xbox 360, but not without a catch. In fact it would require a subscription contract, similar to subsidized wireless phones. Cheap-to-free smartphones are certainly a big part of why everyone seems to have one today, and the carriers are certainly making their money back on data contracts.

So, would an Xbox 360 with full-priced monthly Xbox Live Gold subscription contract ($15/month, including Xbox Live Gold for the web) change sales for the console? It has certainly changed the wireless market. Consumers don't even realize that they will be paying far more than that in limited data plans, just as they won't notice the $15 monthly fee for a subsidized Xbox console, especially with the price coming in even below the current Wii price. I think, once again, Microsoft has found a winning strategy to bring some PS3 or Wii owners over to the Xbox platform. Low cost and massive media offerings combined could definitely revitalize hardware sales in the year before a new device.

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