The Power of Pricing... Kinect Style

News is coming out from E3 that Microsoft has introduced a new name for Project Natal: Kinect. (A cross between kinetic and connect... better than "Wii" I suppose.) Amid all the sound and fury (a performance by Cirque du Soleil as part of the intro!) Microsoft somehow avoided mentioning a price point. This has been leaking around the internet, though, and it sure looks to be $149... but there will also be a somewhat better version for $189. No word yet on bundle deals with new Xbox 360s (though a new Xbox 360 Slim is also rumored), but the pricing may be better when included in a hardware bundle.

So Microsoft has essentially chosen not to try and grab a significant part of the installed base; at $150 you'd have to be pretty convinced on the value in order to buy Kinect instead of 3 games of your own choosing. Developers are going to be hesitant to spend money adding Kinect support if the installed base isn't significant. And to develop a Kinect-only title would be highly risky if the installed base is small... yet it's precisely that (a Kinect-only title) that would drive sales of Kinect hardware (assuming you had a really compelling title).

It all adds up, in my mind, to Kinect being a non-factor in overall industry terms. It's likely that Move will fall into the same category, though Sony may not charge as much for it. Motion control hardware may be a bit of a fad this year, but by next year no one will care.

Pricing is important, which is why free-to-play is making such a huge impact on the gaming business. Too bad Microsoft couldn't figure that out. Or, more likely, they thought about pricing Kinect at $49 and losing money on every one in order to drive broad penetration of the installed base... and decided that the Kinect technology wouldn't drive additional software sales enough to make up for the money they'd lose on every one. Which, I think, is probably the right call.