Microsoft (NASDAQ:MSFT) is a master at playing "follow the leader." This time, the Redmond Rumbler is dropping the price of its fanciest Xbox 360 video game system by $100, only days after Sony (NYSE:SNE) did the same to its PlayStation 3 system. Both the PS3 Slim and Xbox 360 Elite will cost you about $300 and come equipped with 120 GB of hard-drive storage.
Of course, Microsoft would argue that the price drop was more of an open secret, and that the near-simultaneous timing just a coincidence. Aaron Greenberg, a director of product management for Microsoft's gaming division, tells Ars Technica that the price drop had been planned for months, as part of a product life cycle Microsoft plans "years in advance." Whatever the case, consumers will see the high-end versions of both Sony's and Microsoft's consoles taking 25% cuts to their price tags, while adding more storage and new features.
That could be enough to spark a powerful upgrade cycle, which might spell trouble for Nintendo (OTCBB: NTDOY.PK). The Nintendo Wii was never the most powerful video game unit available, and it lacks even the option to add a hard drive without hacking the system. But its $250 price point and unique, family-friendly games have kept the Wii outselling all comers for years. Those days may be over for Nintendo, unless the company trims prices on the Wii as well. The competition is getting a wee bit too close.
I believe that these console price drops should kick-start the stalled engines of the whole sector -- just in time for the critical holiday shopping season. However, this two-pronged catalyst may not yet be priced into the value of the game producers. So this could be the perfect time to pick up a few shares in Take-Two Interactive (NASDAQ:TTWO), Activision Blizzard (NASDAQ:ATVI), THQ (NASDAQ:THQI), or Electronic Arts (NASDAQ:ERTS) before Mr. Market reacts to skyrocketing game system sales. Where there's system sales, the games will follow.
How would you invest in a video game market that's about to burst open with refreshed growth? The comments box below is dying to know.
