Why the $199 Price Cut will Save the Xbox 360

Microsoft’s long rumored price cut for the Xbox 360 has finally been confirmed.  The Arcade SKU will be available for $199 starting September 5.  Of course this is a great move for Microsoft at the moment; Xbox 360 sales have been very stagnant the past few months.  However, many gamers have already called this a move of weakness that signifies the Xbox 360’s demise.  Here’s why they’re wrong:

History

First of all, historically, over 75% of console sales occur after the console is dropped to a price less than $200.  Microsoft even mentioned that in their statement announcing the price drop.  So if you take that percentage into account with the current 20 million Xbox 360’s sold, that’s a lifetime sales number of about 80 million consoles.  That’s a pretty damn good number especially considering the original Xbox’s recorded lifetime sales were about 24 million.  Actually, a lifetime sales figure of 80 million consoles would make the Xbox 360 the fifth best selling console of all time.  I’d say that’s a success for Microsoft.

Some people are saying that this drastic a price cut in less than three years of the Xbox 360 being available implies that Microsoft is giving up on the console.  Again, look at history, people!  The Playstation 2 was dropped to the price of $199 less than two years after the console was released and guess what: it became the freaking best selling console ever made.  Just because the Xbox 360 is available for a low price doesn’t mean that Microsoft will suddenly drop the console.  They are doing it to attract more consumers.  Which brings me to my next point…

The Economy and Wal-Mart Shoppers

Microsoft has been trying to attract casual gamers for years and this may be the perfect time to do it.  Right now, the economy is sliding downwards, which means sales at department stores like Wal-Mart are increasing as everyone is looking for a bargain.  So, for one second, imagine that your one of these people and your whining child is continually begging for a “video game player” this holiday season.  What do you do?  You drive your car to Wal-Mart and pick up the cheapest “Xboxstation” you can find and bring it home to your squealing kids.  Which system did you choose?  The Xbox 360.  Not only was it the cheapest, but that Wii thing that your kids were asking for was unavailable.  You then grin and go spend the $50 you saved on beer or something.

Ok, back to reality.  Do you see my point?  Wal-Mart shoppers are going to love this price and, believe it or not hardcore gamers, Microsoft has been attempting to attract this type of gamer for years.  And the current economy plus the price cut will help Microsoft finally get them.  Because even though these gamers won’t go out and buy a game every week, they are almost guaranteed to buy a Madden or Call of Duty every year.  And more importantly for Microsoft, they aren’t going to go online and complain about how they bought a console that has no hard drive on it.  In fact, they don’t know what the internet is.

Proven Fact

History + Wal-Mart Shoppers + a Bad Economy = Guaranteed Success

Given this information, there’s no way Microsoft can lose.