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GameStop: 360 Cuts Will Drive Huge New Sales

GameStop's top brass tells us that MS will find the expanded audience with two to fourfold sales growth. But donít count PS3 and Wii outÖ

Recent speculation from analysts have cast Microsoft’s 360 price cut as increasing sales of the console only modestly. Despite the fact that the Xbox 360 Arcade SKU has undercut Nintendo’s Wii to become the cheapest current generation system, Wedbush Morgan analyst Michael Pachter expected the decrease to drive only an additional 15-20 percent sales over the next twelve months, while EEDR analyst Jesse Divnich has stated that the console can figure on only a 20-30 percent bump in the short term.

But some of GameStop’s top executives are telling a different story. Speaking to Edge at GameStop Expo in Las Vegas, the retailer’s senior vice president of merchandising Bob McKenzie and executive vice president of merchandise and marketing Tony Bartel feel that, at least for GameStop, such estimates are overly conservative.

According to McKenzie, “[We expect Xbox 360 sales to have] more in the range of a two to fourfold increase. It’s significant.

“Even since the markdown last Friday,” says McKenzie, “we have seen significant increases in sell-through. You would expect higher sales initially, but we’re actually much more bullish on our projections of what this markdown will do.”

But then, why should the company be so optimistic? It is after all not an enormous price cut, with most of the models only shedding $50. Yet according to McKenzie even drops of that nature are powerful. “It’s very psychological. .. It creates a big opportunity for the first-time gamer who’ve been afraid to step up to a next generation system.” McKenzie also thinks that the new tags of $199/$299/$399 “make all those price points much more retail friendly.”

Of course, it’s not just low prices that will drive consumers to Xbox. Bartel tells us that combined with a new proliferation of titles rated E for Everyone will make the system more palatable to what is now referred to as the “expanded audience.”

Next: GameStop on PS3 and Wii’s holiday chances