On Wednesday, Signal Hill analyst Todd Greenwald said in his E3 preview note, "We think the 360 has lost significant momentum to both the Wii and PS3, especially in Europe, and is in need of both a price cut and new features to bring in mainstream gamers beyond the Halo/Call of Duty/GTA crowd.

"Hopefully, Microsoft will have something else up its sleeve [at E3], such as a new motion-enabled controller (to better compete with the Wii)."

A motion-enabled controller had been rumored for Xbox 360, although it"s unclear whether or not such a controller will come to fruition.

A $50 price drop to $299 for the Xbox 360 Pro model also looks likely later this week.

As the Xbox 360 moves closer to the mmoabc99 mainstream sweet-spot, Microsoft Game Studios is concentrating on delivering more mass market-friendly titles. Internal studio Rare is developing the mainstream title Banjo Kazooie: Nuts and Bolts, and very convincing rumors say that the singing game Lips will soon be announced, on top of (also rumored) Xbox Live customizable avatars.

Microsoft is slated to deliver its E3 conference on Monday, July 14.

Greenwald also commented on other game makers, such as EA, whose E3 lineup, he says, is "promising yet unproven." Upcoming EA games include Spore, Mirror"s Edge, Mercenaries 2, Dragon Age, Dead Space, Warhammer: Age of Reckoning and others.

He added that a playable Saints Row 2 could ease investors worried about THQ"s prospects.