NOV. 20, 2015 • Microsoft Corp. is lowering the MSRP of two Xbox One SKUs to $299 between November 26th and 30th. The move is part of a $50 off promotion on every Xbox One SKU. As both The LEGO Movie Videogame Bundle and Gears of War: Ultimate Edition Bundle are already priced at $349, their price drops to $299 during the Thanksgiving holiday weekend. This marks the first time Xbox One hardware has fallen under $300 in any configuration. Microsoft is also discounting 150 Xbox One and Xbox 360 titles – many from 40% to 60% off – between the 20th and 30th when purchased directly from Microsoft. Until November 24, only Xbox Live Gold members have access to the discounts. Regular Live subscribers can upgrade to Gold for one month by paying $1 to take advantage of the software discounts.

Update: On December 9, Microsoft extended the $50 off promotion on every Xbox One bundle SKU through December 26.

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Impact: A $50 price break on Xbox Ones for the holidays was fully expected. But unlike last year, Microsoft has limited the discount to Thanksgiving weekend. Our suspicion is the $50 deal is likely in place through January, but Microsoft wants to push more system purchases into the Black Friday weekend for a better news release headline the first week of December. The Xbox One has been a disappointment in every major market except the U.S. However, even in the United States, the only way to drive Xbox One sales has been via deep discounts. Keeping the Xbox One at $349 price parity with the PlayStation 4 during the weeks leading into Christmas is not something we think benefits Microsoft, and we don’t expect the company intends to place itself in that position. The software promotion is intriguing from the standpoint that many third-party titles are included and the discounts are exclusive to purchases from Xbox.com. Late in October, Microsoft said that half of all Xbox One owners log into Live every day, and the number of all monthly active users on Live is 39 million. That is a huge number of people who will be enticed to buy direct if the game they want is on the list. For physical retailers that maintain stock on Xbox software, this is another reason to rethink their floor space investment in console titles if core game consumers are siphoned away by such direct discounts. PC games are already largely gone from store shelves, and console titles may be heading to the rear loading dock.