Xbox 360 pricing rumors continue; Arcade to see a price increase, Elite a price decrease, Pro to die

Whaa!?     

Industry watchers and consumers alike are dizzy with confusion over the latest rumors surrounding a speculated pricing adjustment to the three respective models of Microsoft’s Xbox 360 gaming system.

It all started with PS3 news last month, when Sony announced that production costs had been slashed by as much as 70% per unit, immediately suggesting to some that a price cut was likely to be on its way for Sony’s marquee PS3 gaming system.

Needless to say this sent whispers throughout the void, and talk began to circulate regarding exactly how, or if, Microsoft would cut their prices in a bid for new consumers who may be thinking of buying themselves a console in the coming months. All of this is covered in last week's article, found here.

This all sounded like great news to Xbox gamers, but unfortunately the most recent news coming down the pipe in the past few days has more than a few gamers now scratching their heads in bewilderment.

According to MCV UK, retailers over in the UK are getting word from Microsoft to expect not a decrease, but in an utterly shocking move, an actual increase in prices on the Xbox 360 Arcade system in the not too distant future. Even worse, there are similar indications that various Xbox accessories, including controllers and headsets may also be getting a price hike. Needless to say, the news has got quite a few gamers wondering exactly what the heck is going on, and perhaps more importantly, is the same thing going to happen here in the US.

Now, most gamers here in the USA do actually feel a small sympathy pain whenever we hear about our brothers and sisters in other countries having to contend with higher prices across the board, whether it be systems, peripherals, or even games. Often our foreign counterparts have to deal with some comparatively steep prices when it comes to their rigs and content, and usually they’ll be the first ones to point out this fact on any message board dealing with the subject. Even our northern brethren in Canada are faced with a similar dilemma, and the poor Aussies often seem to be really feeling the burn, not only in prices, but also in the limited titles available in their country. Now, of course, the argument is that most of these differences have to do with exchange rates, taxes, dues, government regulations, blah, blah, but still, it certainly doesn’t make penalized gamers feel any better about the unfortunate reality of things. But despite the genuine sympathy that US gamers feel when it comes to price moves overseas, the thing that gets them personally concerned is the fact that often foreign markets have a tendency to act as the proverbial “canary in the coal mine” for pricing strategies that may eventually find their way into the domestic market.

On the surface, a price increase for the Xbox 360 Arcade seems completely counter-intuitive, but if the entire scope of recent events is looked at objectively, it really may not seem as unlikely as it does at first glance. There has been a lot of talk about Microsoft’s three-tiered Xbox 360 pricing plan, with the most notable suggestion indicating that the mid-level Xbox 360 Pro system may very well being going on the extinction list as part of the new adjustments that 'Big M’ is planning on making in the coming months.

Further suggestions seem to indicate that aside from the elimination of the Pro system entirely, the Xbox 360 Elite may be getting a price reduction, essentially moving into the Pro’s soon-to-be vacant place in the line-up’s pricing plan. This seems reasonable enough to most gamers, but what is an increase in the drive-less Xbox 360 Arcade’s price designed to do? After all, it won’t exactly slide into an existing price slot if the Pro is eliminated and the Elite drops to its price, now would it?

The answer could be as simple as an attempt to actually make the Arcade a more profitable SKU. It’s difficult to find precise sales figures when it comes to the exact number of each of the 360’s different iterations, mostly because Microsoft likes to keep their cards close to their chest and usually prefers to report all three SKUs as a lump sum, but the Arcade is generally not considered the “gamer’s choice” simply because it doesn’t come with a hard drive to save games to. In essence the Arcade was designed for the “casual” gamer, or for those who wanted another system for sys-link play or to replace a defective Pro. It’s largely considered a back-up unit my most regular gamers, and the suggested new pricing could be nothing more than Microsoft conceding the low-price market to Nintendo’s Wii, who has already shown its resilience in a difficult market. The Arcade, as it stands, may simply not be worth it anymore to Microsoft, particularly with the proposed Elite pricing becoming much more affordable for consumers. There is also the possibility that the Arcade itself may receive some type of modification that would justify the price increase, but at this point, things are far from clear.

In essence, the end result of the new speculated prices could be an attempt to make the Elite the new workhorse and the Pro put out to pasture. With speculations about a new enhanced Xbox 360 on the horizon with the anticipated release of Natal next year, it only strengthens the argument.

Officially Microsoft has made no announcements regarding a price change, nor has it verified the possible release of a forthcoming enhanced Xbox 360, but in truth, such silence is nothing new for the company. After all, when the Arcade replaced the previous Core system, Microsoft didn’t even confirm the existence of the new unit until only about a week before it hit store shelves back in 2007. Interestingly, even then, the retailers knew all about it weeks before Momma Microsoft owned up to its new baby boy. Don’t be too surprised if the same thing happens again this time around.

Ultimately, though the rumors are perhaps causing their fair share of confusion, chances are that everything will be made clearer in the coming weeks. Be sure to check back here for more up-to-date info in the future.

Expect the first news ripple to be coming in the next day or two, as Sony takes center stage in just a few hours at Gamescom (the European equivalent of E3), in which many industry watchers are expecting some Sony announcements regarding the PS3 Slim and a possible PS3 price drop. Don’t expect anything official from Microsoft until well after they hear what Sony has to say.

 Update:  It's done!  Sony has dropped their price for the PS3.  Now we wait ...