Going along with the HD DVD camp's aggressive price cuts, which have already taken Toshiba HD-A3 player down to just $149.99, Microsoft has reduced the price of its HD DVD drive add-on for the Xbox 360 console to $129.99. The drive launched at $199.99 and went down to $179 last summer before some online retailers started offering it for $130 in December.

This time, however, the price cut comes from Microsoft itself, and it should propagate across all retailers. Along with the new price tag, Microsoft allows customers to sign up to receive five free HD DVDs (PDF) by mail. The list of free titles is limited (only 15 are available), and the offer only applies to HD DVD hardware purchased between October 1, 2007 and February 28, 2008.

We probably don't need to point out that Warner—the biggest player in the home video business—decided to forsake HD DVD last month, effectively signing the format's death warrant. Today, only Universal and Paramount are still releasing HD DVD movies, while Sony, Fox, Disney, Lionsgate, and Warner are all backing Blu-ray exclusively.