Industrygamers

PS3 is now $249 (in case you didn't hear). The last time Sony dropped the price on its console was nearly two years ago when the Slim model was introduced. It immediately gave PS3 a momentum boost, and that's exactly what Sony needs against Microsoft now, since the Xbox 360 continues to outsell it in North America.

Speaking to IndustryGamers, EEDAR analyst Jesse Divnich commented, "We are pleased to see the PlayStation 3 increase its value to consumers by reducing the price of the PlayStation 3 hardware from $299 to $249 (with comparable reductions in other regions).  It is no secret that the PlayStation 3 has been struggling for some time against the Microsoft Xbox 360 in North America (but slightly outperforming in Europe) and this price reduction will undeniably increase hardware and software sales of the PlayStation 3 in all regions, both in the short and long-term."

He added that third parties are likely thrilled with the news as well. "We can only imagine that third-party publishers and retailers are excited by Sony’s announcement as it lowers the barrier of entry to consumers before the crucial holiday season," he said.

RW Baird's Colin Sebastian told us, "This move was largely anticipated, and in my view somewhat overdue.  The console market needs a shot in the arm, and this will help a bit.  Now it's up to Microsoft to make the next move."

Microsoft may not feel compelled to cut price just yet, however. The odds are that Microsoft will wait to see what impact the PS3 price drop really has on their Xbox business first.

"It is difficult to predict, at this time, whether the Microsoft Xbox 360 will follow suit, we do not believe that Microsoft will immediately react.  Microsoft will likely wait to see the commercial impact of the price disparity between itself and the PlayStation 3 before reacting with its own strategy, which may include a potential price drop," Divnich continued.

The good news for the industry, which just suffered its worst month in July since October 2006, is that the price drop should help propel sales going into the holiday season.

"One thing is for certain, this holiday season just got a lot more interesting and the impact of the price drop will positively impact HD gaming sales this holiday season," said Divnich. "We expect the effect of the PlayStation 3 price drop to positively impact third-party publishers, retailers, and accessory manufacturers across the board. It is safe to assume that confidence across the entire industry just lifted. EEDAR had projected that HD gaming will grow 10 to 15% this holiday season, with news of the price cut; we now anticipate HD sales to grow 14 to 19%, internationally."

http://www.industrygamers.com/news/ps3-has-been-struggling-against-xbox-360-microsoft-not-likely-to-react-to-price-drop/

Yeah I pretty much agree with him. MS will take a wait and see approach.

Key words in that entire article: "North America"

It goes without saying that he was talking about the world.

nice headline

Maybe in North America MS can afford a 'wait and see' approach but that's definitely not the case in EMEAA. 360 is already teetering on the brink of irrelevance in continental Europe and the disruptive impact that the PS3 price cut is likely to have could push it over the brink. If MS doesn't react quickly enough in that region it could send the console into a death spiral over the next year or so over there like it's seeing in Japan currently.

It shows though how video game analysts are far to close minded -- sure the 360 is outselling the PS3 in North America, but it is behind in Europe and in many regions like Japan it is barly competing now. 

 Personally i wouldn't be surprised to see Microsoft drop the price of Kinect and the price of the Kinect bundles by $50 -- that would drive sales up worldwide and help Microsoft target the casual market.

Honestly...

Microsoft don't need to cut the price at all. America is huge for the console, huge enough for it to stay competitive Worldwide.

If I was in charge over at MS, I'd simply keep the price the same in America and give it a small cut in Europe. Plenty of giftcard deals in America along with bundles all over the place. Cut the price early next Year sometime.

I'm really torn on this. I predicted earlier this year that the 360 FOR SURE wasn't going to cut price and I thought the PS3 probably wouldn't either in order to keep profit margins high.

Now that Sony has officially price dropped I'm really don't know on what to think MS will do. On one hand I could see them reacting with a $50 cut soon in order to stay competitive in continental europe where Sony is slaughtering them, but then on the other hand I could see them riding the wave of Gears, Halo, Kinect, CODMW3, and Battlefield will give it this holiday and cut price by $100 next year.

The $50 cut will not be enough for the PS3 to consistantly outsell the 360 in NA but I'm curious how big the difference WW is going to grow.

no it shows how you are trying to nitpick everything. Sony is struggling in North America, and the analyst pointed out that out and that sony is cutting its price to try to stay competitive in North America. Why is there anything wrong with him mentioning that. Thats why he specifically said North America is where the ps3 needs a boost.