Microsoft is cutting the Japanese price of its Xbox 360 games console by 13% as it struggles to match sales of rivals Nintendo Wii and Sony PlayStation 3.
The Xbox has struggled for sales in Japan
Following similar price cuts earlier this year in the US and Europe, the standard model will now sell for 34,800 yen ($304; £148).
Earlier this month, Sony also cut the cost of the PlayStation in the US and introduced a cheaper version.
Both the Xbox 360 and PlayStation 3 are now trailing behind sales of the Wii.
Nintendo has a strong lead, not just in the Japanese market, but also in wider global sales.
In the first half of 2007, Microsoft sold 122,565 units of the Xbox 360 in Japan, compared with 503,554 PlayStation 3 units and 1.78 million of the Wii.
Microsoft's basic Xbox 360 model will now sell in Japan for 29,800 yen.
So far, Nintendo has shipped 9.3 million units of the Wii, which was introduced last year.
Sony has sold 5 million of the PlayStation 3, which also first went on sale in 2006.
Microsoft has sold 11.6 million of the Xbox 360, although it has been on sale for a year longer.
All three firms are now targeting sales in the key pre-Christmas period.