Sega Announces Price Cut on Dreamcast Game System

Sega Enterprises Ltd., the No. 3 maker of video game consoles, said Wednesday it will drop the price of its Dreamcast system 25% to $150.

The price cut from $200 comes as Sega looks to accelerate sales by luring mainstream consumers who shop in discount stores such as Wal-Mart and Target.

Sega has sold 2.1 million units in the United States since Dreamcast went on sale last fall and it hopes to sell 2.9 million more by March 31, said President Peter Moore.

Dreamcast sales have slowed after demand exceeded expectations during the holiday season.

Sega’s price cut comes about two months before Sony Corp. launches its highly awaited PlayStation 2 console, which will cost $300. Moore said Sega wants to lure cost-conscious customers while producing game software that appeals to more serious video game players who have already bought Dreamcast.

“What we’re doing is playing both ends of the spectrum,” Moore said. “To get to the next level, we’ve got to attract a more casual gamer. Price is a major tool to do that.”

He also said Sega can appeal to retailers by providing a steady stream of shipments, while the PlayStation 2 is likely to sell out quickly and be in short supply.

The price drop is a departure from previous approaches that emphasized rebates and Sega’s online service, SegaNet, which lets users log on through the modem-equipped Dreamcast and play games over the Internet.

Sega still plans to offer a $150 rebate to users who agree to join SegaNet for 18 months at a cost of $22 a month. Many users first may be exposed to the service and rebate offer through advertisements built into games such as “NFL 2K1,” Moore said.

Sega will offer users of such games 50 hours of free play over the Internet. About 12 games that can be played over the Internet will be available by year’s end, Moore said.