New Game Plan For Xbox Pricing?

The new price tag of $299 will reportedly be announced at the E3 video game industry trade show in Los Angeles on July 15-17, according to The Hollywood Reporter, which cited an anonymous major retailer.

Jesse Divnich, an analyst from research firm Electronic Entertainment Design and Research, believes that Microsoft has already done all it can to move beyond an audience of hard-core gamers who already own the console.

"We expect a $50 price cut," Divnich said. "They really don't have much choice but to lower the price to gain market share in the mainstream," Divnich said. "Their monthly sales in the U.S. have slowly been diminishing, while Sony PlayStation 3 and#91;PS3and#93; sales have been increasing monthly."

Microsoft officially lowered the cost of the Xbox 360 in Australia and New Zealand earlier today from AU$399 (US$380) to AU$349 (US $332), according to Australian gaming site IGN Entertainment.

The move may be a precursor to a price slash in the U.S., said Arvind Bhatia, an analyst at Birmingham, Ala.-based brokerage firm Sterne Agee Group.

"We've already heard that prices have been slashed in Australia," Bhatia said. "As far as the U.S., Microsoft may be inclined to cut prices to build up momentum against PS3. We've seen that PS3 sell-through rates have picked up as they try to catch up to Microsoft."

Even with a lower price of $299, Divnich believes that the mainstream market sweet spot is around the $249 mark, which is the price of Nintendo's Wii, which has made a "fantastic grab of the market," Divnich said.

While U.S. Xbox price cut whispers have made the rounds in the past few months, speculation rose after gaming site Joystiq reposted an upcoming K-mart circular ad for the week of July 13. The purported ad was originally scanned and posted on the Web site High-Def Digest showing the lower price. Joystiq also posted a flyer from Radio Shack advertising the lowered price for Xbox, which the site said was sent by an anonymous employee at the retailer.