Sony Corp. slashed $100 off the price of its entry-level PlayStation 3 game console to $299 on Tuesday in an effort to goose sales ahead of the crucial holiday shopping season.
The Japanese electronics giant also unveiled a thinner model of the PS3 that packs a 120-gigabyte hard disk drive. The newer model, 36% smaller and 32% lighter than the 80-gigabyte version, is expected to hit store shelves by Sept. 1. The 160-gigabytye PS3 also took a price cut, and is now $399.
"This is a game-changing moment for us," Peter Dille, Sony's senior vice president of marketing, said in an interview. "There's a lot of pent-up demand for the PS3. It's been a tough economy, and a lot of people have been sitting on the fence waiting for the price cut."
The move was widely anticipated by a number of analysts, who said a price cut could help Sony regain momentum.
"A price cut is long overdue on the PS3," Colin Sebastian at Lazard Capital Markets said. "We expect an uplift in unit sales. But the question longer term for Sony is whether they can sustain market share gains, especially when competing platforms, such as the Xbox 360, lower their prices as well."
Although the PlayStation 2 was the dominant console of the last generation of devices, the PS3 so far has lagged behind Microsoft Corp.'s Xbox 360, which has sold more than 30 million units worldwide, and Nintendo Co.'s Wii, which has sold more than 50 million consoles. Sony, meanwhile, has sold roughly 24 million PS3s as of June 30.
One of the main reasons has been the PS3's price: Sony launched the PS3 at $599 in November 2006. It lowered the price two years ago to $399, but that was still more than the Xbox 360, whose entry-level model cost $199, and the Wii, priced at $249.
Sony has maintained that the PS3's built-in Blu-ray disc player justifies the expense.
"Even in the tough economy, families have been reluctant to give up their at-home entertainment," Dille said. "For $299, you're getting a game machine, a Blu-ray player and a 120-gig hard drive you can use to download movies. It's a tremendous value."
Many in Hollywood have been eagerly awaiting a PS3 price cut in hopes it would boost sales of high definition Blu-ray discs at a time when the overall DVD market is contracting.
Blu-ray disc sales rose 91% in the first half of the year to $407 million in the U.S., according to the Digital Entertainment Group, an industry trade organization. However, that's still a tiny percentage of overall consumer spending of $9.73 billion on home entertainment in the same time period. The Blu-ray disc sales also did little to alleviate an overall drop of 13.5% in disc purchases.