Rumours have been swirling that the Xbox 360 is about to get another price cut in the US, following cuts in Europe and Asia earlier this year. It seems the Aussies have beaten the Americans to the punch, however, with confirmation that all of the various 360 SKUs will be receiving price reductions down under from today.
Effective from July 2, the Xbox 360 Arcade unit will receive an A$50 price drop and will now retail for A$349 ($333), A$50 cheaper than the retail price of the Nintendo Wii locally. The Xbox 360 Pro bundle will now retail for A$499 (down from A$579), while the Elite will sell for A$649 (down from A$729).
An Xbox 360 exec has also confirmed with GameSpot AU that the 360's total install base in Australia and New Zealand has now reached more than 400,000 units, putting it second in the market behind the Wii. We spoke to Jeremy Hinton, Xbox group product marketing manager for Australia and New Zealand, about the rationale behind the price cut, whether Microsoft was feeling pressure from its console competitors, and what sales impact they were expecting from today's announcement.
GameSpot AU: We've seen price drops staggered throughout different times for different regions this year. What's the rationale behind that?
Jeremy Hinton: Today we're just announcing price adjustments in Australia. One of the big changes Microsoft has made is that with price drops, you'd see the US would drop, and pretty much within two weeks we would drop as well. Now, it's very much the individual countries who manage what they feel would be best for their respective regions. In March we had a price drop in Europe, and in April we had a price drop in Asia. So we're definitely moving away from that big global strategy.
GS AU: What's the reason behind the cut?
JH: We'd had a pretty good track record of--wherever possible--passing along savings to the consumer. So with the recent currency fluctuations as well as some cost savings we've been able to make, we thought that the July period was a perfect time to pass those along to the consumer for people looking to lay by for Christmas.
GS AU: So can this be taken as a sign that--in the Australian market anyway--the 360 is facing a lot more competitive pressure from the Wii and PS3?
JH: No, absolutely not. This is a strategy we've had for some time. Decisions are made not necessarily around what the competition are doing. And from our point of view, the last 12 months have been very successful--more dollars have gone through retail tills on Xbox 360 products than both of our competitors.
GS AU: So the 360 is now the cheapest console on the Australian market. What advantages does that give you?
JH: It's great because we're seeing in other areas that we're heading into tough financial times, and basically any opportunity to make a saving on what is an entertainment product makes it more attractive to families in particular. There's also no question that the Wii is appealing very broadly, but at A$50 cheaper, the 360 is probably something that now goes into a lot of people's consideration. And from what I hear, there are some retailers offering deals through July which will put it significantly lower than the retail price.
GS AU: How will this price drop affect sales?
JH: We do expect sales to spike, as with any price drop. It was interesting the last time we dropped the price--we didn't see an immediate spike. Nowadays, people aren't really sitting by, absolutely certain they want an Xbox 360, but waiting with bated breath for a price drop. When they hear that the 360 is cheaper, or they see an ad, that's when they think maybe they'll check it out. In line with that, we've got a fairly hefty marketing campaign which will run over the next few weeks that will help tell consumers.
GS AU: Jeremy Hinton, thanks for your time.