Microsoft Confirms Kinect Pricing, Analysts Debate

Following several weeks of speculation, Microsoft today confirmed the U.S. pricing options for its Kinect motion-sensing controller interface, offering a console bundle for new consumers and one for existing Xbox 360 owners. An Xbox 360 with 4GB of internal Flash memory will be sold in a $299.99 bundle "this holiday" with the Kinect sensor device and launch title Kinect Adventures, which features obstacle courses, river races and other one-on-one play activities. Kinect and the game will be sold independently of the console for $149.99. In the UK, the 4GB Xbox 360 Kinect bundle will retail for £249.99 ($382) and also include Kinect Adventures, with the same package selling for €249.99 ($323) in mainland Europe. Microsoft is also selling Kinect and the game in a package for £129.99 ($197) in the UK and €149 ($193) in mainland Europe. The pricing is in line with what analysts, retailers and media had expected, although, as Lazard Capital Markets analyst Colin Sebastian notes, "above the $99 price we view as the 'sweet spot' for the device." EEDAR's Jesse Divnich is more positive about the pricing, noting key differences between Kinect and other peripheral devices that have been on the market before. "EEDAR feels that $150 is an appropriate price for the Kinect," he says. "Previous peripherals with mass-market appeal, such as band kits, have sold millions of units worldwide even while priced north of $150." But unlike items like band kits that are tied to specific games or genres, "developers will be able to optimize its software for years to come," Divnich adds, recommending investors and industry-watchers take a different tack in evaluating Kinect's market positioning than they would with devices seen at retail in the past. The $299 bundle is, according to Sebastian "a good value, in our view, which could spark renewed interest in the platform this holiday." Divnich says that renewed interest is key: "The Kinect's success this holiday season is crucial to rekindling the energy among the casual and mainstream audience, the same audience that has exacerbated software revenue declines since 2009," he points out. Kinect will have 15 games available at launch, including Kinectimals, Kinect Sports, Kinect Joy Ride and Harmonix's Dance Central, all of which were shown at E3 -- with the latter receiving an especially positive reception. Titles will be priced at $49.99, and Divnich says "given the likelihood [Dance Central] becomes one of Kinect's top sellers it will likely set a precedent on pricing for all future Kinect-required games." Games will sell for £39.99 ($61) in the UK. Retailers are already accepting preorders for both the $299.99 console bundle and the $149.99 device-and-game package. Microsoft says those who pre-order receive a token to download three additional Kinect Adventures levels as a bonus exclusive to pre-ordering. Some retailers will offer their own bundles; Walmart has previously revealed it will offer an online preorder bundle containing the device, a $30 Walmart.com gift card, and a choice of one Kinect launch title. Microsoft additionally confirmed that the Xbox 360 console with 4GB of internal memory and all the other features of the recently announced 'slim' Xbox 360, including redesigned styling and wireless connectivity, begins shipping on Aug. 3 in the U.S., and will be available for $199.99. The 4GB console will retail for £149.99 ($228) in the UK and arrive on August 20. As for Microsoft's competition, Sony has already announced its own bundle offerings for its new PlayStation Move gesture interface -- a $399 bundle that includes a PlayStation 3 console; the Move controller; the PlayStation Eye camera required for it to work, and the now-standard DualShock 3 controller together, alongside Move launch title Sports Champions. Users who already own a PS3 can get that entire package, minus the console itself, for $99.99, and users who own the console and the Eye camera can get the Move controller as a stand-alone for $49.99. The the separate Navigation controller, which offers functionality with Move comparable to that of Wii's Nunchuk control stick add-on, is not included with any of these bundles; it's set to sell as a stand-alone for $30.