Just hours after analysts predicted a North American price drop, Microsoft has confirmed that is has dropped the RRP on all three of its Xbox 360 SKUs – with the now sub-$200 Arcade pack leading the charge.

Coming in below the price of rival Nintendo’s popular Wii, Microsoft has aimed for the sweet spot with its $199.99 Arcade bundle. The standard Xbox 360 console now costs $299.99 and the upper-end Elite is now $399.99.

A press release from the firm reads: “History shows that more than 75 percent of all console sales happen after the price falls below the $200 mark. For millions of consumers who have been waiting for the perfect time to buy an Xbox 360 console, their moment has finally arrived. At $199, Xbox 360 is the most affordable next-generation console on the market, offering something for everyone with the most dynamic, interactive entertainment experiences available.”

Microsoft’s senior vice president of the Interactive Entertainment Business Don Mattrick added: “We are thrilled to be the first next-generation console on the market to reach $199, a price that invites everyone to enjoy Xbox 360. Xbox 360 delivers amazing performance at an extraordinary value with the leading online service and best lineup of games, downloadable movies and TV shows available from a console.

“The majority of consumers make the decision to buy consoles once the price falls to this mark, making this an important milestone for consumers and the industry.”

The move mirrors recent price reductions in Japan. Surely Europe is soon to follow?