Xbox One Price Cut Appears to Be Working

In the nine days since Microsoft  (NASDAQ: MSFT  ) began selling a $399 version of its Xbox One console, demand for the gaming system appears to have increased, according to one major video game retailer.

"I definitely think we're already seeing in our stores with our reservation program as well as dialogue with PowerUp Rewards [members that] there's a stronger demand as a result of the price drop," GameStop  (NYSE: GME  ) President Tony Bartel said on a phone call last week. "The good news for us is ... we'll sell a lot more units."

The newly announced $399 Xbox One package does not include the Kinect motion sensor controller, which was bundled with the previous $499 version of the console. That configuration is still available. The new $399 version can be pre-ordered at GameStop, directly from Microsoft, or from a number of the company's other retail partners for a June 9 release. Microsoft also plans to sell Kinect as an add-on, though its product page on the Xbox website shows it as "coming soon." 

The unbundling of Kinect allows Microsoft to offer its base console at the same price as rival Sony's  (NYSE: SNE  ) PlayStation 4. Sony has an early lead in the console war with the company reporting in April that 7 million PS4's have been sold. Microsoft has not released sales numbers for Xbox One but the company posted -- also in April -- on a company blog that the console had shipped 5 million units to retail.

Hardware sales are climbing in general

Spending on video game hardware grew 47% to $983 million during the first quarter of 2014, but total industry consumer spending on video gaming fell 1% to $4.6 billion compared to the same period in 2013, according to NPD. The research firm attributes the rising hardware sales to the launch of Xbox One and PlayStation 4. NPD believes that this trend should continue through "most of 2014," according to NPD analyst Liam Callahan.

While hardware sales have risen and will likely stay high, Microsoft may have won itself more customers with the $100 price cut. So far neither company has released a game that pushes fence-sitters into choosing one platform over the other -- there haven't been any massive hits for either console. Even Titanfall, a heavily hyped exclusive on Xbox One that was bundled with the original $499 Xbox One package for no additional charge, did not appear to move the needle on console sales. 

That's not to say Titanfall is not a hit. The game was the top-selling title in April, according to IGN, but it hasn't become the mass-market cross-over megahit (like Halo for the first Xbox in 2001) that convinces casual gamers and families to spend an extra $100 buying a console. With the base unit of both new consoles now costing $399, software releases may play a bigger role in people unsure of which to buy. 

Both Sony and Microsoft have made exclusive deals for various titles, but Microsoft has deeper pockets. Offering exclusivity gives game companies a smaller universe of potential buyers, but the added publicity and promotion is often worth it. Though details of the deal between Microsoft and Titanfall publisher Electronic Arts  (NASDAQ: EA  ) have been kept secret, you can assume the arrangement compensates the publisher for all the PlayStation sales it won't be making. 

More good news for consoles

While Xbox One has not sold as well as PS4 it has gotten off to a strong start on a historical basis. The One has outsold the Xbox 360 by 76% for both of those systems' first six months in market, according to Microsoft. To date sales of PS4 and Xbox One hardware are more than double the sum total of PS3 and Xbox 360 hardware sales in their respective first six months, according to NPD.

So while the media often makes it seem like one or both consoles are struggling to find users, neither company has reason to be alarmed. Most people do not buy a new $399 (or $499) console on the night it gets released. Instead people either wait until a game they want is only offered on one platform or some life occasion (a holiday or a birthday) helps justify the purchase. And while the new consoles are exceptional, the previous generation was pretty damn good. For casual players or those with younger kids (of which I am both), there's simply not a pressing need to upgrade. I'll buy one eventually, but my Xbox 360 still meets my console needs. 

The sales battle is just beginning

The Xbox price cut needed to happen to make sure Sony didn't run off to an insurmountable lead. With that no longer an issue it's possible that neither console becomes the clear winner. In the previous generation there were three winners -- Xbox 360, PS3, and Nintendo's (NASDAQOTH: NTDOY  ) Wii were all hits with many people owning more than one. The same could be true in the next-generation battle, as both Xbox One and PS4 could reach the approximately 70 million consoles their predecessors each sold.  

There's no guarantee of that, and it's still early enough that either side could develop (or stumble upon) the so-called killer app that tips the scales in their favor. But for now, the decision to buy one console over the other is personal preference, and neither side has a clear advantage. Without the Xbox price cut, that was not the case -- even people comfortable with the Xbox controller (like me) because they own a 360 had to give PS4 consideration. Now, I am much more likely to stay in the Microsoft fold. 

Microsoft does not need to eliminate Sony. Both companies are successful if they hold serve and continue battling for first place versus a close second.

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  • Report this Comment On May 28, 2014, at 6:28 PM, JJ82 wrote:

    "demand for the gaming system appears to have increased"

    ""I definitely think we're already seeing"

    "Microsoft may have won itself more customers with the $100 price cut."

    Appears, think, may.

    There is NOTHING pointing to the One selling great now, just speculation and its coming from people that actually believe that PRICE mattered when history proves otherwise...not to mention the MASSIVE outrage over everything NON price related about the Xbox One.

    MS made an ENTERTAINMENT system, not a GAMING system...and they made one with weaker hardware, hardware being drained by non-game related things making their games even worse compared to the competition that designed their gaming system in a way that it can not only also provide apps and streaming, but do so in a way that it doesn't suck the power away while gaming.

    The few media outlets like this one and MS are totally disconnected from consumers.

  • Report this Comment On May 28, 2014, at 8:03 PM, brownebloke wrote:

    JJ82, maybe you should ask a Gamestop employee if the kinect-less pre-orders are going well.

    I asked a Gamestop employee, out of curiosity, if the $399 price tag has had any pre orders & his response was:

    "Oh Yeah! People were just waiting for the price to come down."

    Media outlets disconnected from consumers? Really? How about trying your own research before assuming consumer confidence?

  • Report this Comment On May 28, 2014, at 8:16 PM, Droppo wrote:

    I asked the local Gamestop guy if they were getting a lot of people interested in X-box One a couple of days ago, and he sighed like he was tired of being asked about it. I told him I was waiting for a Kinectless version before I bought one, and he started trying to convince me that the Kinect was a good idea so he could sell me one that they already had in stock. Just from that one anecdote, I got the feeling that there is a shift coming in the sales for X-box One.

  • Report this Comment On May 29, 2014, at 12:02 AM, Unclechuby wrote:

    To me the best deal still to date was Targets. You got the system with Forza or TitanFall and a year of gold at the discounted price of $449. The price was and is still not the problem for me. Having other people that I play games with getting an next gen system is. I know I can play with other people that I meet, but when only one friend upgrades and he just did it this week and with a PS4 says a lot. I will get one just not until the end of the year. waiting for a holiday bundle like 50 other people on my friends list.

  • Report this Comment On May 29, 2014, at 11:09 AM, Jvd wrote:

    I am sorry,but the second guy to wright a comment on here said ,to do our own research to see if there is a demand," go ask the store that NEEDS this to go through,in order to stay open for two more years" really!really? Really.... Your a moron.ofcourse they will say YES.they want you to order one to.i was just at GameStop three days ago,told the guy there i read sony passed on Titan (yahoo had something posted just two weeks ago about)also that Titan was not proving to be as BIG as they had hoped,tooth and Nail the guy argued with me,till I pulled out my smart phone,got online and showed him.even then he was STILL trying to get me to leave with on.and yes I am a power up member there.have had a ps4 since the day it came out.i am sorry but not one of my friends has said that due to the 100 off are planing to run right out and buy one.MS told a lot of us gamers where we could go with our selfs if we did not like the new things they had originally planed for it.that is why the xBox one will never do that GREAT.we real gamers will never forget after the YEARS of being in their corner,and for the 360 turned our backs on PS,they told us to "get over it" and to "deal with it"and also as the person above notes,PS IS FOR GAMERS,xbox is for your living room.AND NOTHING ANY XBOX FAN EVER SAYS WILL CHANGE THAT FACT.

  • Report this Comment On May 29, 2014, at 12:24 PM, thor77789 wrote:

    Xbox may be more of a entertainment system for the living room then a gaming system, but it don't mean its not a gaming system. I like how everyone says it's not. Does it not play COD, BF4, Watch Dogs, etc. Yes it does, just like the PS4 does. So what makes the PS4 a gaming system but not the xbox then. Cause it plays the same games. Maybe at a lower resolution and a little slower, but that's a very small difference. In the end is still plays those Games with next gen graphics and just a little less detailed then the ps4. That's a trade off well worth it when your able to do more then just gaming with the device. For example, when buying a HD TV, which one would you prefer assuming these were the only two options available, a standard 1080p HD TV or a smart 720p TV that can access apps and internet with the TV. Most people would go with the smart one even if the price was higher considering that it's worth it since it's capable of doing more. But what is the true purpose of the TV? TV was made to watch television shows or movies. So for someone to say they want the PS4 because it's a gaming console and the xbox one is not since it can't run most games on 1080 resolution, you may as well buy the standard 1080p TV then with no access to apps or internet. Cause its mainly a device used for television entertainment. Oh but we get mad that xbox is more of a media system and can play the same games as the ps4 minus the exclusives. So what truly makes the PS4 a gaming console and the xbox not. The difference in the speed and resolution is payoff I can trade to be able to not only play the same games that the ps4 can but also have more and better media options. That shows that everyone is being Biased about the ps4. I can truly say that the system that offers more to me is gonna be the winner. I want to get more bang for my buck and xbox has delivered that. Unless sony can come up with something better then just a gaming console, then I would definitely choose the PS system over the xbox. "Just saying"

  • Report this Comment On May 29, 2014, at 2:26 PM, brownebloke wrote:

    JvD. I'm a gamer & a fan of all gaming. You're apparently a PS Fanboy. You're lack of proper punctuation shows character as well.

    Regarding your "PS IS FOR GAMERS" comment, says who? Have you seen World of Warcraft, League of Legends, Dota 2 numbers in volumes? PC Gamers are real gamers--which the more we learn, the more we realize.

    I personally love the Xbox One & I will purchase an PS4 when it goes down. But Sony, themselves, have been attempting to enhance the DRM--even before Microsoft.

    The Sony Vita (which I own) attempts to sway owners to purchase games & movies galore. The Sony PSP GO even attempted DRM beforehand.

    Microsoft's attempt at a living room console was more of a play against APPLE TV--which enjoys happy DRM customers already. APPLE, for what ever reason, has made DRM sexy. Any other company that attempts DRM is seen as a scam.

    Bottom line is, Xbox One will be selling a lot more now than before (I didn't say more than PS4, we don't know) as their price has gone down $100 (without kinect.) Whether you like it or not, Xbox One will be selling more than when there was only one model of the Xbox One with the kinect.

  • Report this Comment On May 29, 2014, at 2:34 PM, brownebloke wrote:

    Apple owned the mobile market with the Iphone(until Samsung & Android devices sprouted.) Apple's next objective was to OWN THE LIVING ROOM.

    If you've ever visited a Microsoft store, you'll see it looks so similar to an Apple Store, that it shows you the original intent of Microsoft with the Xbox One--to beat Apple to the punch in the living room.

    I say: "Xbox record that" & "Xbox On" & "Xbox Turn Off" because I'm lazy to find the remote. Does that convenience make me less of a gamer?

    The PS4 controller has a broadcast button. With the kinect I say: "Xbox Broadcast" and Xbox Broadcasts my screen on Twitch.

    Both PS4 & Xbox One are powerful systems. But wait a couple of years and both systems are obsolete in comparison to PC gaming

  • Report this Comment On May 29, 2014, at 2:56 PM, JJ82 wrote:

    @Brownbloke but the difference is that Apple is making single products for each market. MS is trying to make all-in-ones that do nothing great.

    And as for your reply to me.

    1. No store is going to say something they are selling is not doing well, they will hype it.

    2. Some stores sold out of their Xbox Ones WITH Kinects...doesn't mean they are selling well elsewhere.

    3. The Kinect was one single issue with the system and wasn't the most complained about. More people got angry at MS for making an ENTERTAINMENT system and not a gaming system with far too many resources going to non-gaming related things and their turn towards digital, always connected gaming.

    MS can backpedal another 10 miles and it will never undo creating hardware around entertainment instead of gaming. Its set in stone now, the One will always be far weaker that the PS4 thanks to a massive memory bandwidth gap.

  • Report this Comment On May 29, 2014, at 3:02 PM, elgoogeht wrote:

    i call bs on this one, not even on the amazon's top 100 video games list. if you look harder, it's #201.

  • Report this Comment On May 29, 2014, at 5:35 PM, JoeLemon wrote:

    Are you going to also ask Gamestop if an extended warrenty is a good idea? All that matters is sales. Fact is that Xbox one with titanfall for $449 was a better deal and it didn't sell well.

    Xbox promoted itself as a entertainment center not a gaming system. So gamers bought the system promoting games.

  • Report this Comment On May 29, 2014, at 6:19 PM, ZephyrGumby wrote:

    I am amazed at the lengths fanboys will go to in bashing the other system. If you chose a PS4 or and XBOX One and you are happy with your system, why do you need to bash the other. It's like some of these kids get home from school and the first thing they do is hunt for an Xbox article so they can continue to bash Microsoft and the Xbox One.

    As another person alluded to, Microsoft was vocal about their vision for the next gen system and that caused them to get a lot of backlash. Don't think for a minute that Sony wasn't on the same path...they just didn't announce details of their system until after Microsoft did and they adapted their presentation and policies accordingly. Sony also wanted (and still wants) digital games and they want to make money off of physical game resales.

    If you study the specs of the systems, there is a bit more power in the PS4 but I suspect, over time, that disparity will lessen if not disappear completely as programmers become more adept at getting the power out of both systems and updated toolkits are released.

    Microsoft has taken a lot of heat but they are in a difficult situation. No matter what they do, they are criticized (unbundle the kinnect, now they are criticized on site for doing so) They have listened to consumers and are making changes that address consumer complaints, concerns and wishes. They have a good system that will gain more parity with the PS4 graphics and it will continue to have the entertain hub functionality and it, along with the PS4 will continue to add other features. They both are good systems and they both need more and better games.

  • Report this Comment On May 29, 2014, at 7:45 PM, AudieMurphy wrote:

    Jvd's comments are what is funny about this whole thing, all that "years with the Xbox, MS betrayed us, never going to forgive, going PS" stuff is pure irony. Maybe these guys are too young or have short memories but at the beginning of the last Gen it was a cocky Sony who told their dedicated fans that they had to buy a $600 system in order to have features that not everyone wanted and told angry long time fans to "get a part-time job" if they were "real gamers". They compiled dozens of PR flops on top of each other (sound familiar) finally buckling and dumping backwards compatibility (pledged that all future PSs would be) in order to cut the price. I don't know which is worse, that MS would copy the attitude that they beat last time by being the "gamers machine" or the fans that forgot that flip flopped when the situation did.

  • Report this Comment On May 29, 2014, at 10:10 PM, Cerberus82 wrote:

    So much crying, bickering, complaining, and other words that would be censored all over our new generation of gaming consoles. Get over yourselves already!!! Did you make the purchase and are happy? Good. Are you still on the fence and are waiting for the next holiday sale and/or exclusive? Good, be patient then and don't listen to wining crybabies. Both of these systems offer up great qualities, and yes they both have their drawbacks. Be thankful that we have a competitive market, that is what drives development more than anything. Team PS4 or Team XB1, and yes Team WiiU, enjoy the new cycle, don't cry about it.

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