The time is right for hardware and software price drops from Sony and Microsoft, according to Baird researcher Colin Sebastian. Regarding hardware, the industry-watcher said core gamers already have their eyes on next-generation technology, making the timing ideal for Xbox 360 and PlayStation 3 price drops.

Hardware and software prices should drop, says Sebastian.

Sebastian further noted that Microsoft's rumored $99 Xbox 360 Kinect bundle would be a "nice start" to add hardware value for consumers, but a straight price cut would be more effective.

On top of hardware price drops, Sebastian said a $50 price point for "most" software releases makes sense, considering the age of the present console generation. The analyst believes this could be achieved through a "modest cut" to the royalty fees paid to Microsoft and Sony.

Concerning April's NPD data, Sebastian said to expect disappointing sales for the month. The industry diviner remarked that hardware and software sales are expected to remain "weak," trending down 25-30 percent year-over-year. Full NPD data will be revealed next week.