Microsoft Corp. on Monday said it’s next-generation Xbox One video game console will go on sale in November at $499, above what many analysts had predicted.
The price point, announced at the company’s press conference in Los Angeles on the opening day of E3, triggered concern among investors who are looking to this year’s show for evidence of positive momentum in a sector that has suffered four consecutive years of sales declines.
The price, though not the highest ever for a game console, was sufficiently steep to trigger a slide in Microsoft’s stock. Shares of the Redmond, Wash., tech company fell 20 cents to close at $35.47. Microsoft unveiled Xbox One at an earlier event in May, highlighting the console’s broader entertainment features, including the ability to search, recommend and play videos, movies, TV shows, live sports and music on the upcoming device.
At E3, the company focused on the entertainment medium expected drive the initial wave of device sales this holiday – hard core games such as “Titanfall,” an adrenaline pumping first-person mech shooter created by many of the same developers involved in the original “Call of Duty” franchise, and
If previous console launches are any guide, most of the devices sold this year will come from avid players who won’t blink at shelling out half a grand for the latest game machine. Prices typically decline in subsequent years as component costs drop. With each price cut, more consumers climb aboard, expanding the number of living rooms that have a console.
Ultimately, the video game platform business has been about having as many active consoles deployed as possible to drive software sales in a classic razors-and-blades model where the money is made in selling blades. Even though the Xbox One is a multi-entertainment device, Microsoft is sticking to the tried-and-true console playbook by starting with the demographic that’s most likely to be engaged with the device – young males who spend billions of dollars, and hours, each year playing ultra-realistic shooters, racers and sports games.