Microsoft on Thursday announced it is slashing the price of its Xbox 360 Elite by $100, a move that comes just a week after Sony cut PlayStaion prices by the same figure.

Redmond, Washinghton, Microsoft's popular Xbox 360 Elite, which packs a  120 GB hard drive, will join the PS3's price of $299, starting Friday. The Xbox 360 Pro, its $299 20GB console, will come down $50 at $249 while supplies last as it becomes phased out. Microsoft's Arcade, its cheapest Xbox, which comes without a hard drive, will stay put at $199.

Microsoft’s Xbox price cuts comes as stores are getting ready for a bleak Christmas holiday season.

Retail sales this holiday season are likely to range from up 1 percent to down 1 percent from last year, according to a report released Thursday by market research firm Global Hunter Securities.

Microsoft hopes the price cuts will reinvigorate a game market that has faced tough times in the recession.

According to industry analyst NPD Group, video game sales fell for the fifth straight month in July, down 29 percent from a year earlier to $848.8 million.

Among the three major players in the gaming industry—Nintendo, Sony, and Microsoft—only Nintendo hasn’t given into the price-cutting trend. The Wii has cost $250 since its introduction in 2006.

In terms of sales, Nintendo is leading the pack with 52.6 million Wiis sold, while Microsoft sold 31.4 million Xbox 360s, compared with 23.7 million PS3s for Sony.