Time for an Xbox 360 and PS3 Price Drop?

Let the saber-rattling begin. As the E3 rumor machine lumbers to life, prefacing a holiday season teeming with exclusives like Uncharted 3 and inFAMOUS 2 or Gears of War 3 and (maybe) Star Wars Kinect, price drops are once more on analyst and pundit minds.

This summer we'll be two years into Sony's PS3 price dive and a year into the Xbox 360's makeover. Microsoft didn't actually drop the price of its $300 Xbox 360 when it retooled the system last June, but it did toss in a few extras, like a larger internal hard drive and an integrated wireless card.

The PS3's makeover in September 2009 was by contrast both transformative and sticker-slashing. Sony tucked the insides of its towering angular monstrosity into a svelte 33 percent smaller, 36 percent lighter case, then lopped $100 off while keeping the system's core features--including Blu-ray playback--intact.

What's next? Wedbush Morgan analyst Pachter thinks Microsoft goes first on a price drop, followed by a Sony match. What "going first" means is less clear than it was a couple years ago. If we side with Pachter's view that the core gamer demographic is probably saturated, we're looking at a war fought over double-dippers (you have one system, why not two?) and not-really-core buyers, waiting for prices to fall below $200.

Microsoft could drop the 250GB Xbox 360 price by $50 or even $100 and hit that price mark, but then it already sells a fully-loaded Xbox 360 for $200. With the disc-spin noise all but eliminated, do you really need more than 4GB storage for active downloadable content and save games?

It could alternatively play the bundle shell game, swapping out parts and slipping in Kinect or one of its upcoming exclusives to sweeten the deal. Fast as Kinect's been selling, imagine the sales deluge if Microsoft sold its 4GB Xbox 360 with Kinect and a pack-in game (Kinect Sports?) for just $200.

If that happened, Sony would have to counter, possibly throwing a PlayStation Eye and Move controller into a system bundle, though it's hard to imagine a $200 PS3, fully loaded, with all the pieces necessary to get Move up and running.

The question's whether the PS3 has what buyers want. I don't mean core gamers--they already have one. I'm talking about the rest, especially those eyeballing the motion-control craze. It's a pretty tough sell on the PS3. For all its superior accuracy, Move requires between two and four control wands (not to mention the optional navigation controllers) for two players to go at it.

Microsoft's Kinect requires none. And remember, we're talking about the sort of buyer who plays a couple times a week, say family night, or with guests over. I'm not sure Move's ever going to reach out and grab that consumer.

And Blu-ray, well, it's not what it might have been. I'm a wannabe videophile, but the cost to buy the same movies cynically repackaged and clearly resold to bilk consumers has me flipping studios the bird, foregoing Blu-ray "extras," and reaching for Netflix. I dumped my DVD collection last summer, and the only two Blu-ray discs I own are No Country for Old Men and There Will Be Blood. I've essentially given up on spindle-driven video media.

It's not all Sony doom and gloom. The industry makes most of its bank off software, and Sony may have the edge in 2011 with exclusives like inFAMOUS 2, SOCOM 4, Ratchet and Clank: All For One, Twisted Metal, Resistance 3, Uncharted 3, and The Last Guardian.

Microsoft has Gears of War 3 and Forza 4, but about Kingdoms, Codename D, Star Wars Kinect, Project Draco, and XCOM, we know too little to say. And the rest (like Perfect Dark 2) are still only rumors.

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