Microsoft Cuts Price of Xbox 360's HD DVD Player

It was bound to happen sooner or later: Microsoft has dropped the price of its add-on HD DVD player for the Xbox 360 by $50. The high-definition DVD war that has seen mounting support for Blu-ray has forced Microsoft to do the inevitable. Digital Journal, Op-Ed -- The Xbox 360 has sold well. Getting out of the gates a year ahead of Sony's PlayStation 3 has given Microsoft's gaming console a healthy lead. But when it comes to the high-definition DVD format war between Blu-ray and HD DVD (Microsoft supports HD DVD and Sony supports Blu-ray), Microsoft has not seen their HD DVD player add-on sell as well as the console. Their fix? Lower the price. In the high-definition war between Blu-ray and HD DVD, Microsoft took on a different strategy with the Xbox 360: Rather than having a player built-in to the 360 (and thus raising its cost), Microsoft chose to provide a high-def player as an add-on to the console so that consumers would not be forced to pay extra for technology they did not want. Sony, on the other hand, chose to put a Blu-ray player inside the PS3, meaning everyone who took home a console also became an owner of a Blu-ray player. Microsoft has now lowered the price of its HD DVD player add-on from $180 to $129 effective immediately in the U.S., Canada, Australia and New Zealand (no announcements from Europe yet). At time of publishing, The Xbox Canada website still reflects the old price of $199, but a spokesperson for Microsoft has confirmed the price drop with DigitalJournal.com in Canada. Individual retailers still show older and more expensive prices, but they should be adjusted soon. The reasons for the price drop are obvious: Microsoft does not want to see its technology slain by Blu-ray. After movie studios began flocking to Blu-ray (putting 70 per cent of the home video market in the Blu corner), it was only a matter of time before the video game industry gave a knee-jerk reaction. Microsoft has been a longtime supporter of HD DVD along with Toshiba, but the company has also admitted it would consider backing Blu-ray if that is what consumers wanted. The first step before total abandonment, however, is a price drop -- if you can't sell it, give it away. The 360 itself is not in any trouble (at least not yet). A Microsoft spokesperson recently told DigitalJournal.com, "This was an outstanding year for Xbox, with Robbie Bach indicating during the CES keynote that sales of 17.7 million consoles this holiday season surpassed original expectations and put Xbox 360 on track to register the biggest year in video game history as U.S. consumers spent more on the Xbox 360 platform in 2007 than on any other gaming platform." The HD DVD player add-on hit the market in Nov. 2006 when it sold for $200, but Microsoft lowered the price to $180 last summer. Many independent resellers cut it by another $50 over the last month and now Microsoft is simply catching up. But the price cut sends mixed messages, as it suggests the HD DVD player for the 360 has not sold as well as it could have. Microsoft was also expected to announce an Xbox 360 console with an HD DVD player built-in at the Consumer Electronics Show, but it didn't happen. This suggests even Microsoft is weary of making the whole console obsolete if or when HD DVD loses the format war. Coupled with Microsoft's statement saying they would "consider" Blu-ray support, it's pretty clear the Redmond-based giant is keeping its options open in case the format tanks. However, Microsoft is keeping a stoic face, telling GameSpot the move was based on "continuing the success of HD DVD in the market and responding to consumer demand." Microsoft said they recognize pricing is a critical factor in consumer spending habits, and the company says production is more efficient so they can now pass along cost-savings. That certainly sounds like a lovely story.