Microsoft News Tracker

Nothing livens up the dog days of summer like a rumor and Ben Kuchera at Ars Technica has a good one about Microsoft cutting Xbox 360 prices in September. The net is that the rumored price cuts are:

• Arcade (no hard drive) cut from $279 to $199
• Pro (60GB) from $349 to $299 
• Elite (120GB) from $449 to $399

Last month, Microsoft replaced the 20GB Xbox 360 with the current 60GB model at the same price and Kuchera says his source more or less called that one correctly. Meanwhile, VGChartz claims to have separate confirmation of the Arcade price cut so maybe it will all come to pass in time to inspire visions of Xboxs dancing in the heads of gamers for the holiday season.

Assuming the price cuts happen, there is speculation as to whether Xbox 360 hardware cost reductions prompted the cuts, but Microsoft isn’t saying and that is not really a supportable reason for the perennially penurious Entertainment and Devices division to leave money on the table. I’m sure the currently weak sales of the Xbox 360 are a much better motivation.

While we are on the subject of the Xbox, Microsoft announced a mini-coup at the E3 gaming conference with the revelation that Final Fantasy, the longtime stalwart Sony PlayStation series, was coming to the Xbox 360 with the release of Final Fantasy XIII. That’s true enough, but now it turns out that work hasn’t even started since developer Square Enix hasn’t received Xbox development kits and in any case, the PS3 version will ship at the same time.

Microsoft announced this week that their multiplayer Games for Windows - LIVE service was now completely free. When Games for Windows — LIVE was announced in March of 2007, it was billed as “the extension of the Xbox LIVE games and entertainment network to the Windows platform” and the consumer pricing was the same with a free Silver level and a paid Gold level which allowed cross-platform play among other things.

It is not clear how lucrative that monetization scheme was, but it did draw complaints that Microsoft was charging for what was available free for other PC games. Whatever the reason, it is all free now as an unalloyed loss leader for supporting PC games and Microsoft will be rounding it out with an online PC gaming marketplace equivalent to that available for Xbox LIVE:

Microsoft today announced that its Games for Windows initiative is set to expand with the launch an online PC gaming marketplace this fall. The service will deliver free and paid downloadable game content, along with trailers, demos, and other content comparable to the company’s Xbox Live offerings.

In addition to the added features, the Games for Windows Live interface will also be redesigned to be “much more PC friendly.” Microsoft has not yet specified whether full games will be made available for purchase on the network.

And full game sales are clearly on the Microsoft radar screen according to Microsoft Senior Global Director of Games For Windows, Kevin Unangst.

NPD has released their US game console retail sales numbers for June and as had been expected, Nintendo sold 666,700 units to pass Microsoft’s Xbox 360 and become the number 1 selling game console of this generation. More alarming though was that the Xbox 360 fell conclusively behind the Sony PS3 in monthly sales, 219,800 to 405,500 units.

Yes, NPD does not report online sales, and yes, the PS3 was helped by the success of the exclusive Metal Gear Solid 4 game, but it looks like the boost that the Xbox 360 got from being alone on the market in the USA for a year has evaporated and the picture looks worse worldwide.

Finally, while on this subject, Sony and Nintendo did not exactly wow the crowd at E3, but Nintendo did introduce an improved motion sensitive controller and Sony paralleled Microsoft’s E3 announcements with doubled disk storage for the $399 PS3 version and a video download service.

Microsoft’s press show today led off the E3 gaming conference and besides the new Xbox version already announced and the usual announcements of new games, the big news was a deal for Xbox LIVE Gold subscribers to watch Netflix movies streamed via the Internet:

At the E3 Media and Business Summit, Microsoft Corp. (Nasdaq: MSFT) and Netflix, Inc. (Nasdaq: NFLX), the world’s largest online movie rental service, today unveiled an exclusive partnership to offer consumers the ability to instantly stream movies and TV episodes from Netflix to the television via the Xbox 360 video game and entertainment system. Xbox 360 will be the only game system that lets users instantly watch movies and TV episodes streamed from Netflix. This movie watching innovation will be available to Xbox LIVE Gold members who are also Netflix subscribers and will let those users enjoy streaming movies from Netflix on Xbox LIVE at no additional cost.
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A growing library of more than 10,000 movies and TV episodes will be available from Netflix when it launches on Xbox LIVE in late fall, with more choices added over time.
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From the Netflix Web site, members simply add movies and TV episodes to their individual instant Queues. Those choices will be automatically displayed on the TV screen via Xbox 360 and available to watch instantly. Once selected, movies will begin playing in as little as 30 seconds. In addition to instantly streaming movies to the TV, Xbox LIVE Gold members can fast-forward, pause and rewind, all using either their Xbox 360 Controller or Media Remote.

It seems to be the same implementation as the $100 Roku set top Netflix box announced in May which is fine, although one does wonder why they didn’t spiff up the implementation a bit to cut out the separate Netflix website step and allow selection direct from the Xbox.

Rounding out their announcements, Microsoft also unveiled something called Xbox LIVE Primetime which is coming this fall and is billed as “the next evolution in game shows.”

Xbox LIVE Primetime is a groundbreaking channel on the new Xbox experience, a new generation of games and entertainment experiences that will be available this fall for Xbox 360. The world’s biggest virtual game show stage, Xbox LIVE Primetime is a place where content is always fresh; play is global, live and massively multiplayer; and prizes are plentiful. A first-of-its-kind phenomenon, this new generation of interactive game shows lets Xbox LIVE members challenge friends and choose to compete against people from across the globe in real time. Xbox LIVE Primetime launches in the fall with the following interactive game:

• “1 vs. 100” (Endemol). From the makers of “Deal or No Deal,” Endemol, the world’s largest independent production company, brings the popular television game show “1 vs. 100” to Xbox LIVE Primetime. The exclusive game pits one Xbox LIVE member against 100 others from around the world with a live host and great prizes. The goal of “the One” is to eliminate all the opposition by correctly answering questions, hoping that the opponents will answer incorrectly and be eliminated from the game. And stay tuned for “1 vs. LIVE,” where one lucky winner will have a chance to compete against the entire Xbox LIVE community.

My immediate observation is that I find the premise of “1 vs. 100″ a trifle dubious as to entertainment value - it’s like an unedited TV game show with all the participants invisible and only a scoreboard visible to the viewer. Why would anyone not participating even care? However, the real question is what is the monetization plan that is paying for the “live host and great prizes”? Are there commercials like a TV game show or is there some sort of special fee? I’m sure there will be more fun with this one in the fall.

The rumors of an Xbox 360 price reduction came true today, but it turned out to only be a clearance sale on the 20GB version as Microsoft has replaced it with an 60GB version at the old price:

Microsoft Corp. is giving consumers more gigabytes for their buck. The company today announced an Xbox 360 console with triple the storage space of the original console, but for the same price of $349 (U.S.) estimated retail price (ERP).

Available in retail stores in the U.S. and Canada starting in early August, the upgraded Xbox 360 will include a 60GB hard drive for storing the growing wealth of digital entertainment available for the console, including music, movies, television shows and game content. In addition, Microsoft today dropped the price of its 20GB Xbox 360 console in the U.S. and Canada to just $299 (U.S.) (ERP) while supplies last, a savings of $50.
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Xbox 360 is just one of three Xbox 360 gaming and entertainment systems Microsoft offers. Microsoft’s Xbox 360 Arcade, which comes with a 256MB memory unit and five Xbox LIVE Arcade games, is a value for the whole family for $279 (U.S.) (ERP), and the premium Xbox 360 Elite console is available with a 120GB hard drive for $449 (U.S.) (ERP).

Presumably cost reductions on the base electronics and on hard drives make it all doable at a profit or not too much of a loss. Don’t expect Nintendo or Sony to follow suit though:

I’m just waiting for Sony’s release now to complete the picture by saying something along the lines of: “No way, our $399 (40GB) and $499 (80GB) models are still bargains, considering you get a Blu-ray player.”

Seriously, Sony has said they’re not going to cut prices during E3, but there is a rumored new model coming in August.

Originally, the Sony PS3 seemed overpriced, but Blu-ray may well have saved the PS3 or the PS3 may have saved Blu-ray depending on how you look at it.