Microsoft said on Thursday it would lower the price of the high-definition DVD player accessory for its Xbox 360 game console in the United States to $179 from $199, and add five free movies to anyone who buys the machine in August or September.
HD DVD is a next-generation technology developed by Toshiba and backed by Microsoft and film studios including Warner Bros. It competes with Blu-ray, a DVD system from Sony, which is built into its PlayStation 3 game console, an Xbox rival.
Attaching the players to popular game consoles is seen by both camps as a way to get the technology into millions of homes, and pique consumers' interest.
A mass market for high-definition video is still some way off, due in part to the high price of the devices. Blu-ray and HD DVD are battling for domination in a war reminiscent of the VHS-Betamax battle of the 1970s and 1980s. That war was won by VHS after about a decade.
Rival Sony cut the price of its PS3 game console earlier this month to ignite demand. Sony and Microsoft are in a three-way battle with Nintendo, which makes the popular Wii game console, for control of a $30 billion video game market.