Microsoft unveiled pricing for its Xbox 360 HD-DVD add-on drive at its annual gaming event X06, in Barcelona.

The Redmond giant said the add-on drive will be available in the United States, the United Kingdom, France, and Germany in mid-November. U.S. pricing is set at $199.99, £129 ($243) in the U.K, and €199.99 ($253) in France and Germany.

The news arrives just as Microsoft announced its partnership with Peter Jackson, director of The Lord of the Rings films and the King Kong remake. A high-definition version of Mr. Jackson’s King Kong DVD will be bundled with the HD plug-in for a limited time (see Xbox: Say Halo to My Little Friends).

“I don’t think gamers are much interested in next-generation video,” said IDC games analyst Billy Pidgeon. “It’s still going to be about the games.”

“Blu-ray needs the PS3 more than PS3 needs Blu-ray, but Sony will tell you that they can fit more [data] onto their Blu-ray discs, and there is probably some truth to it,” he added. “As a peripheral, the Xbox add-on doesn’t do much for HD.”

Blu-ray and HD-DVD have been warring with each other to be the official next-generation, high-definition DVD format.

Shares of Microsoft fell $0.02 to $27.42 in recent trading, while Sony shares dropped $0.66 to $40.85.

At War

Sony’s PlayStation 3 includes a Blu-ray DVD player within the gaming console and is set to come out in mid-November in the U.S. and Japan, and March in Europe. The price is set at about $500 for the PS3. Many major Hollywood studios have announced their loyalty to the two formats (see Sony Cuts PS3 Price).

Microsoft has announced its allegiance to the HD-DVD format and charges $300 for the Xbox 360 game console (with the $200 add-on DVD player for the PS3 available at an equal cost). Toshiba also backs the HD-DVD format.

“It's actually all about the flexibility,” said games analyst Piers Harding-Rolls at JupiterResearch. “Those gamers that don’t want to pay up front for the HD-DVD technology can just buy the console [Xbox], whereas with the PS3 you don’t have that option.

“Unlike last time round with the PS2 and Xbox, where DVD was well established, so selling the technology was pretty easy, this time Sony has a real task on its hands educating the consumer to the benefits of high-definition video and getting them to pay for it,” he added.

What a Gamer Wants

A big selling point with gamers is the release date of game consoles and the quality of the graphics.

Xbox has been available to consumers since November 2005. Sony’s PS3 is still not available and will be 12 months behind the Xbox when it is finally released. This gives the Redmond giant a distinct advantage in developing its games and their quality.

According to JupiterResearch, Sony sold 90 million PS2 game consoles in-store worldwide in 2005. Microsoft has sold about 23 million Xboxes. One decisive factor behind the PS2’s overwhelming success over the Xbox was the exclusive release of the wildly popular game Grand Theft Auto III in 2001 for a number of months.

However, Microsoft said Wednesday that two episodes of Grand Theft Auto IV will be available exclusively for Xbox customers in mid-October next year. But the exclusive episodic content of Grand Theft Auto IV for Xbox means that PS3 could have nearly the same episodes with some content changes, said Mr. Pidgeon.

Graphically speaking, the Xbox 360 still uses the regular DVD format, while the HD add-on is just for films. However, the PS3’s high-definition player could be used for both videos and movies, which could definitely put Sony on top with an audience so seeped in graphics quality. Another force that could drive the product is sales for high-definition televisions.

“One thing is for sure—gamers have a propensity to adopt high-definition television more than non-gamers,” said Mr. Pidgeon. “Some of the biggest drivers for high-definition TV are sports and games. People who buy the Sony PS3 with next-generation game graphics are going to want to see those graphics.”

Contact the writer:Editorial@RedHerring.com

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