Summary
All of the hardcore gamers will eventually own both the PS3 and Xbox 360. Chances are they have the 360 by now. But if they don't Halo 3 will certainly cause that. What sony and microsoft need to figure out though to win the 3rd generation console battle is - how do you go from 5-10 million units sold to 125million units sold. Well, its all been done before - with the PS2.
Analysis
Microsoft maybe realizes that the PS2 didn't really spike in sales until its price was drastically cut. When the PS2 started selling for 100-150$ bucks, and at half the price of an Xbox, the masses turned to PS2.
So the real question raised is why only cut the price a 100$? They could move 20-25million units this holiday season if it sold for 100-150 bucks. Microsoft made a big miscalculation maybe. I really think there is a number people have in their head as to what a console will cost - and its less than 200$. Thank PS2 for that. The financial barrier between 150$ and say 350$ (the current take home price of a 360) is still enormous.
From a publisher perspective, the console business is a dangerous , dangerous world. Take Stranglehold for example: A simulatenous PS3, 360 release from Midway Games. This is a highly, highly regarded game that wont sell nearly it critical acclaim because its fighting a market without enough units sold. There just aren't enough people to buy it. and because publishers are being strongarmed by Microsoft and Sony to produce Next Gen titles only, there are going to be a few larger publishers who don't survive the christmas season.
And this is why that is bad for gamers - Call it the Madden Effect. If we keep losing publishers to financial times, the bigs (Activision, EA, THQ, and UBIsoft), will push out the market and slow the game innovation to a crawl. Right now, games like Midway's Blitz, push EA to improve features on Madden. Without it, there will be no reason to buy new Madden titles - b/c only the names will change.
What I'm saying is to Microsoft and Sony - you need to move product faster - a lot faster. 100$ cuts are only a small concession. Get the price below 200$. Get a 75 million units out there between the 2 of you so publishers can continue to front 20-30 million on games. Because with the current penatration, only Halo 3, Madden, and 5-10 other titles a year will survive.
