With a gallon of milk costing less than a gallon of gas in many places, it's not surprising to hear Activision CEO Bobby Kotick keep on message about console price cuts in this economy. Speaking with the Times Online, he believes there is real demographic expansion within the industry's customer base, but feels the cost of purchasing hardware is "prohibitive."

He points out that during economic slowdowns the game industry does well because people are looking for entertainment in their homes. Kotick may get his wish if the rumors of an incoming Xbox 360 price drop are true; at the same time, NPD figures show consumers warming up to the PS3's price. Meanwhile, we ponder making a car that runs on milk.

[Via GameDaily]

We're very relieved to know that the 20GB Xbox 360 model isn't advanced enough to experience the equivalent of a mid-life crisis. Not only are a string of alleged retailer ads knocking its asking price down to $299 in July, but an Opposable Thumbs source is suggesting that the model will soon be discontinued and replaced by younger, better model packing 60 gigglebytes.

Still, it's a rumor we've heard before (remember this?), one the "usually trustworthy source" indicates will become reality during E3. Fluctuating hard drive capacities, multiple SKUs and retired models: Welcome to the current generation!

With two separate retail circulars (Kmart and Radio Shack) claiming a "new low price" of $299.99 for the Xbox 360, and a major press conference scheduled for two weeks from today, there's an awful lot of smoke billowing around this rumor. Now you can add an anonymous retail report from The Hollywood Reporter to that list. The venerable trade mag said "the price move will come before ... E3." Huh, would you look at that: Microsoft's E3 press conference is scheduled on Monday just a day before E3 officially kicks off. Just saying ...

The beans may already have been spilled by Kmart, but now another store has briefly emerged from retail obsolescence to spread the legend of the $50 Xbox 360 price cut. A Radio Shack employee recently mailed us the evidence, some scans of what they claim is an upcoming ad set to take effect on July 13 (same as the Kmart ad).

As you can see, the ad purports that we're going to be seeing the 20GB system at $299.99 in the middle of next month. Though it's far from official, the price cut's presence in two flyers would appear to make a Kmart printing mix-up quite a bit less likely. Let us know if you see more evidence.

Joystiq has been in contact with the person who uploaded images (to HighDefDigest.com) showing a "new low price" of $299 advertised for the Xbox 360 in a Kmart flyer, beginning the week of July 6. He snapped the images quite quickly and they've slowly begun spreading across the internet.

We're currently attempting to confirm this information with some of our other retail contact, while our source is attempting to get a full page scan of the Kmart flyer. There is still no word on how this $50 price reduction on the Premium model will affect the Arcade or Elite Xbox 360 consoles, currently priced $280 and $450, respectively. More images can be found after the break. We'll update as soon as we learn more.

Update: Full-page ad pictured here.

[Thanks to everyone who sent this in; with special thanks to that "Anonymous" someone!]

Although the information isn't as solid as if 30 Helens agreed, EEDAR analyst Jesse Divnich believes the PS3 is going to keep increasing its sales and that Microsoft will announce a price cut for the Xbox 360 at E3. He foresees the PS3 gaining momentum and claims Metal Gear Solid 4 will actually have a greater impact on the console's hardware sales than Grand Theft Auto IV did.

Divnich also believes that Microsoft will announce a price cut at E3 next month, speculating the console could also get a new hardware SKU with added features. He claims if Microsoft does cut the price, Sony will respond with a drop of its own within two months. We're currently gathering up 30 Helens to see what they think.

Lazard Capital analyst Colin Sebastian believes a price cut for the PS3 is unlikely this year. He states that Sony management is focused on achieving profitability in the PlayStation division and that a PS3 price cut won't happen in the near term.

Sony expects to sell 10 million PS3s this year, doubling the global number of systems stationed on our little big planet. With the HD movie war in the bag and an increase in HD television adoption, it's not unreasonable to assume the PS3 being people's go-to movie player. As this blogger's mother put it, "Why would I @$%&ing pay for a basic Blu-ray player when I can get a PS3 for the same price? I want to play my Final Fantasy. When is my Final Fantasy coming out?"

Nintendo President Satoru Iwata told analysts today the company has no plans to cut the price of the Wii or DS this year. What, you're surprised? Reuters reports he stated the company's earnings projection didn't take a price cut into account and the continued demand for the company's products don't require one.

With demand outstripping supply on the Wii -- particularly in the North American market -- it's really no shock that Nintendo doesn't need a price cut on its hardware to keep stockholders happy. Nintendo expects to make $5.14 billion in fiscal year '09, which analysts believe is the company being conservative.

Update 8:15 PM EST: Toys R Us Canada has apparently lowered their prices already.

Thanks to an anonymous tipster, we have early word on what might be an upcoming price drop for the Canadian Xbox 360. The above phonecam photo comes from a FutureShop Canada employee, who says he was "quite surprised" to find a $50 price drop for the Xbox 360 Pro Console advertised right on the front page of next week's advertising fliers. Our source also tells us that the inside of the flier trumpets a $50 price drop for the XBox 360 Elite (to $449), an offer which allegedly includes a free copy of Turok.

Both price drops should be effective Friday, if this rumor proves true, and while we have no way of confirming this information as of yet, we have no explicit reason to doubt it either. Regardless, if you're a Canadian looking to buy an Xbox 360, it couldn't hurt to wait a couple of days to see if you can save a bit of green, er, funny multicolored money.

Business Week spoke with Nikko Citigroup analyst Kota Ezawa who believes changes in the PlayStation 3 have dropped production costs from $800 to about $400 per unit. Although Sony may have cut production costs dramatically it's not all sunshine and lollipops, Ezawa expects the Sony games division to lose about $1.4 billion this fiscal year, which is still better than the $2.1 billion loss last year and he doesn't expect prosperity in the division until '09.

With production costs continuing to drop and signs that Sony may see Blu-ray succeed, consumers who held out on the PS3 may see benefits this year. If the cadre of American analysts is correct, there may be another PS3 price drop this year -- although this time it'll appear more a sign of growth than desperation.

[Via PS3 Fanboy]

Jack Tretton thinks publishers should be a tad more considerate before they start suggesting console price cuts all willy nilly. Last month, Activision CEO Bobby Kotick envisioned $199 price tags for the Xbox 360 and PlayStation 3, labeling it a necessary step for both manufacturers' march across the mainstream moat. "Well, I think from an unrealistic standpoint, I'm never surprised by that, because a software manufacturer may not be concerned whether a hardware manufacturer is successful or whether they're profitable," said the CEO of Sony Computer Entertainment America. "But I think they should be, because without the hardware manufacturer, the software manufacturer has nothing to publish on."

Tretton went on to tell The Mercury News that he would never "suggest what software publishers should price their software at," thinking it equally inappropriate for them to put a price on hardware. The point is certainly valid, but it misses the fact that both parties require each other to be successful. It's a nasty Catch-22 the PS3 currently and very visibly finds itself in: Software publishers need an audience to purchase their multi-million dollar games, and hardware manufacturers need said multi-million dollar games to attract hardware buyers. Until the situation finds better balance, you can expect more shoddy PS3 ports and fewer Uncharted gems.

Though Bobby Kotick's heart was in the right place (his wallet), Tretton thinks a change in perspective would do him some good. "I don't know, maybe he should design a platform." Hey now, let's not give the Activision Blizzard behemoth any crazy ideas!

[Via GamesIndustry.biz]