The time is right for Sony and Microsoft to lower prices - analyst

Now is the right time for Microsoft and Sony to lower the prices on both hardware and software for their respective home games consoles, a new report from analyst firm Baird Equity Research suggests. Baird's Colin Sebastian notes that core console gamers are already anticipating the next generation of hardware platforms, hence price cuts for the Xbox 360 and PlayStation 3 would prove an effective way to retain focus on the current generation for a while longer. Microsoft's upcoming $99 Xbox 360 subscription offering signifies "a nice start to bring hardware into the value end of the consumer market," Sebastian says -- however, he believes that a straight price cut to the console would be more effective. In terms of software, the analyst says that Microsoft and Sony should consider cutting the royalty rates that they each take from developers and publishers for game releases, which he believes would help bring prices of new releases down. "For most software releases, we believe a $49 launch price now makes sense, given the late stage of the current console cycle," he notes. This train of thought comes as the NPD is expected to report later this week that retail game sales in the U.S. declined year-over-year in April. Sebastian agrees with the earlier report from analyst firm PiperJaffray, stating that Baird expects April software sales to be down 25-30 percent compared to last year.