Analysis: Average Xbox 360 Price Has Dropped $100 In 3 Months

As part of an exclusive NPD analysis, Gamasutra is estimating that the average U.S. Xbox 360 console is selling for $100 less than its lifetime average 3 months ago, making the system "ideally positioned" to compete this holiday season. Penned by Gamasutra contributor Matt Matthews, the detailed analysis includes exclusive NPD U.S. sales data and in-depth analysis based on it. The section dealing with the Xbox 360 average sales price is as follows: "Price drops are exciting not just for consumers but also for those of us who watch the market and track sales. We fully expected strong sales of the Xbox 360 this month, given the significant price cuts Microsoft made on 7 September: - Xbox 360 Arcade cut from $280 to $200 - Xbox 360 Premium cut from $350 to $300 - Xbox 360 Elite cut from $450 to $400 The price cuts worked: 69,000 Xbox 360 systems were sold each week during September, giving Microsoft its best hardware month this year. What is far more telling, however, is how the average price of each system sold changed after the price drop. According to the NPD Group, the average sale price (ASP) of an Xbox 360 from its launch through July 2008 was just over $376. We estimate that the ASP was in the $330 to $340 range during August. For September, we estimate that the ASP of the Xbox 360 dropped to $276, about $100 below its lifetime average and more than $50 below its average before the price drop. If our estimates are correct, then this signals an even greater role for the $200 Arcade model in Microsoft's hardware mix.

It is worth making two quick historical comparisons. The first Xbox 360 price drop, in August 2007, spurred a 63% increase in sales over the previous month. Then in September 2007, the month of Halo 3 and the second month of the lower Xbox 360 prices, sales rose over 50% from the already elevated August 2007 levels. This year, with least expensive Xbox 360 model dropping below the price of the Nintendo Wii and finally hitting half the price of the least expensive PlayStation 3, Microsoft's system managed only a 43% increase in sales. By these measures, the September 2008 price drop appears to have less of an effect than last year's more modest cuts. At least part of the difference is that the Xbox 360 sales this year have never been as weak as they were in July 2007, but there is still a lingering impression that Xbox 360 could have been stronger. Regardless, with the deepest software library and the lowest entry-level price, Microsoft's price cut ideally positions the Xbox 360 for the coming holiday season." You can now read the full Gamasutra NPD analysis for September, including lots more specifics on trends, hardware and game sales, and prospects for the future.