Microsoft is hoping to lure video-gamers with two free games and a two-month trial subscription to its Xbox Live online-gaming service.
By Jerry Cobb Reporter
CNBC

A price war is underway in Japan involving Microsoft’s Xbox and Sony’s PlayStation 2 video game consoles. But, if you’re holding out for a wave of pre-holiday price-cutting to come to America’s shores, you may be disappointed.

Video-gamers are hoping the price war between Sony’s PlayStation 2 and Microsoft’s Xbox that’s flaring up in Japan will spread to the U.S., which would be perfect timing with the holiday season around the corner.

But analysts say don’t hold your breath. They point out that Sony traditionally cuts prices after the holidays in order to capture as much of the season’s profits as possible: They did that with DVD players last year, and they’ve done it with camcorders, with televisions and other consumer products in the past.

Microsoft has typically followed Sony’s lead with price cuts, and it’s already bundling 2 free games and 2 free months of its Xbox Live online service at the same $180 price point it set at the e-3 industry show in Los Angeles last May.

Some say that makes a pre-holiday price cut on the Xbox unlikely. Also, as Wedbush Morgan securities analyst Michael Pachter points out, with strong demand for video games and video game consoles expected for the season, why in the world would these companies want to cut prices?

“We think Microsoft and Sony will sell about 7 million consoles combined [in] November,” Pachter said. “For them to cut the price by $30 would be making a wealth transfer of $210 million to consumers. I don’t think either of those companies is set up as a charity. I think that as long as they can hit their sales goals with a price cut in January they will do so.”

While the Xbox and PlayStation-2 are both priced at $180 here in the U.S., to get the same online gaming capabilities as the Xbox, PS-2 users have to buy a separate adapter, or a combination pack system, bringing the total cost to $200. Industry watchers say that gives Microsoft a real edge.

“If you buy the system you get two free games, both of which actually work on Xbox Live and offline you can play them on their own,” said Frank O’Connor, editor of The Official Xbox Magazine, which is not supported by Microsoft. The Xbox free trial “lets users try the service and see if they like it before committing to a 12-month subscription. I think they’re going to see a lot of business built on that.”

Another possible boost to Microsoft have been rumors that a major software publisher, Electronic Arts, will announce support for Xbox live shortly, if that happens it will be huge for the company and its online-gaming service.

© 2012 CNBC, Inc. All Rights Reserved

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