JUNE 1, 2016 • Just as it dropped $50 off the price of an Xbox One bundled with selected titles during promotions during the holidays and last March, Microsoft Corp. has done so once again, “for a limited time.” The move puts 500GB Xbox One bundles at $299, with the 1TB models going for $319. Titles in the promotion include: Gears of War: Ultimate Edition Bundle, Name Your Game Bundle, Quantum Break Bundle, Rainbow Six Siege Bundle, Rise of the Tomb Raider Bundle, Special Edition Gears of War Bundle, Spring Bundle, The LEGO Movie Videogame Bundle and the Triple Game Bundle. For comparison, the PlayStation 4 Limited Edition Uncharted 4 bundle is priced at $399, and the Call of Duty: Black Ops III bundle goes for $349.
Impact: While most analysis on this news is fixated on the possibility of a June 13th announcement by Microsoft at the Electronic Entertainment Expo in Los Angeles introducing a new hardware SKU with downsized components, DFC sees the $50 price break differently. This now familiar $299 bundle pricing instead illustrates the reality that Microsoft has trouble selling Xbox Ones without the lower MSRP. That’s not to say the firm will not introduce a Slim model, there is just no other way to motivate a sufficient number of consumers to purchase Xbox Ones without the lower pricing. Furthermore, consumers are not going to be motivated much by a smaller, sleeker product that maintains the same performance numbers of the original Xbox One. It’s going to take a beefier high-performance console to build some excitement, and by all accounts Microsoft cannot deliver on that potential until 2017 at the earliest. Rather than clearing inventory, these regular $50 price breaks are now necessary to keep sales stable, and establish a lower standard MSRP for any Slim SKUs introduced. As we saw late last year, Sony Interactive Entertainment is not averse to $299 promotions during critical sale periods as not to allow price to be a factor for consumers. But if Sony announces a higher-performance PS4 at the current price point this month at E3, we don’t see much change in the Xbox One’s market share.
