Will a Cheaper Xbox One Make a Difference?

Source: Microsoft.

We're now more than four months into the video-game generation led by Microsoft's (NASDAQ: MSFT  ) Xbox One and Sony's (NYSE: SNE  ) PlayStation 4, and we may have its first pricing war. 

Microsoft's new Xbox One bundle -- combing the Xbox One and Electronic Arts' (NASDAQ: EA  )  Titanfall video game -- is being offered for $450 across various retailers. That's a pretty big deal since the original Xbox One hit the market at $500 without a game included. The Titanfall combat game retails for $60 on its own, so the bundle effectively values the console for less than the $400 PS4 console. Sony currently does not offer any bundles.

The Electronic Arts game isn't mere filler. Titanfall just came out earlier this month, and the shooter has been generating rave reviews. Its score across dozens of established reviewers tracked by Metacritic makes it the third best reviewed game for the Xbox One in the console's brief public tenure. Framed another way, it's the best ranked game that's been put out in 2014. If fighting titles aren't your bag, some retailers are also offering a different bundle anchored by the Forza Motorsport 5 racing game at the same $450 price point.  

The discount that started with a couple of retailers has spread in recent days. Now even Microsoft's own store is offering up the two bundles at $450. That may not last. The software giant is describing this as a "limited-time savings" that could reverse itself at any moment. However, if the markdown sparks a spike in console sales this month relative to the PS4, do you really think that Microsoft will be able to go back to $500 for its console or even higher for a system bundled with a popular game?

Both new consoles have been selling well. GameStop (NYSE: GME  ) revealed on Thursday that hardware sales soared 88% in its latest quarter, but the problem is that folks aren't buying games. New software sales plunged 24%, and even GameStop's bread-and-butter business of reselling refurbished trade-ins fell during the quarter. Shouldn't folks have been flooding GameStop with trade-ins to help pay for their shiny new Xbox One and PS4 consoles? Shouldn't gamers be loading up on new software to show off their new toys?

Things aren't perfect. The Xbox One and PS4 were marketed last year as home theater cornerstones, so folks may be spending as much time watching enhanced TV, engaging with Web-tethered apps, or just playing downloaded games. However, the one thing that is certain is that Microsoft isn't doing itself any favors by being the more expensive of the two systems. Sony pulled a fast one at the last minute last year by eliminating its motion-sensing camera as standard equipment to achieve a lower price point, but if Microsoft is able to stick to this "limited time savings" as a permanent move it would give the stateside company a big edge in a race that's been neck-and-neck since November.

Four months into a new product cycle may seem a bit early for its first price war, but there is too much at stake here for an industry's that's been languishing for years. If cheaper Xbox One bundles stick around, don't be surprised if Sony makes the next move.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 31, 2014, at 11:03 AM, arnav803 wrote:

    Yeah I think It will make some difference and the xbox one's sales graph is surely a slap on sony fanboys. who goes on boasting about playstation as if not a single xbox one will meet it's buyer though xbox one's gpu is surely 40-50 % slower than that of ps4.

  • Report this Comment On March 31, 2014, at 3:31 PM, stockwoodie wrote:

    Sell me a TitalFall XO bundle without Kinect for $350 and I'll go buy one today. I have the first generation Kinect and I do NOT want another one. I don't need/want to control my Xbox with voice or motion, just give me a controller and prepared to be pwned.

  • Report this Comment On March 31, 2014, at 8:41 PM, Droppo wrote:

    There really aren't that many must-have games out for the new consoles yet. They need to have at least 30-40 games out before you really can see how well liked the systems are. Titanfall was only the very first big game for the X-box One. I know people need something to write about the console wars EVERY SINGLE DAY, but it might just be a good idea to wait a month or two and then do a little research, find out how it's going, and then publish an article about it.

  • Report this Comment On April 01, 2014, at 10:31 AM, dappleby wrote:

    The xbox 360 is too good of a console to switch to xo. WIth all the issues with the PS3 and the lack of content, I had to upgrade. The price of the PS4 was the deal breaker too. I get the same content and graphics with the xbox 360 as the xo, but the ps4 is actually a much better upgrade from the ps3.

  • Report this Comment On April 01, 2014, at 10:48 AM, mobrocket wrote:


    I had a 360 and really liked it. But what issues on the PS3 are you talking about? The PSN hack?

  • Report this Comment On April 01, 2014, at 10:51 AM, mobrocket wrote:

    XB1 is a good console and it will remain a very good seller. It will probably never be first and PS4 will have a 10-30 million unit lead when this war is over .

    MSFT's main concern is how much they have to spend to stay close to PS4, buying content to keep it off PS4 is not cheap

    And with the new VR rage, Sony may have yet another step on beating MSFT

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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