It looks like we're in for a price war in the games market, with Microsoft announcing it has just cut the price of its Xbox 360 games console.

The Arcade pack now sells for £159.99 (down from £199.99), the Premium pack falls from £259.99 to £199.99 and the Elite drops from £299.99 to £259.99.

This makes the Arcade pack cheaper than Nintendo's hugely popular Wii console (typically £179.99). All prices come into effect from March 14.

"Xbox 360 is now mass-market in Europe," says Chris Lewis, vice president of Microsoft's Interactive Entertainment Business in Europe.

"History shows that £159.99 is the price point where a console's audience begins to expand, and with these new prices in place we're ready to bring more consumers into the Xbox 360 world."

Last year Sony introduced a cheaper, 40GB version of the PS3 at £299.

In a further twist to the battle of the games consoles, Microsoft CEO Steve Ballmer has said his firm will work with Blu-ray technology, now that HD DVD has died.

"We've already been working on, in Windows, device driver support for Blu-ray drives and the like, and I think the world moves on... we'll support Blu-ray in ways that make sense," says Ballmer.

However, whether this ever means there'll be a Blu-ray add-on module for the Xbox 360 (or even one built in) is anyone's guess. Would be cool though, wouldn't it?

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