Tuesday, January 20, 2009

Sony Expected to Cut PlayStation 3 Price in April

Even though it seems that people do realize the value of video games compared to other ways of entertainment, the PlayStation 3 game console is still a way behind competing Microsoft Xbox 360 and Nintendo Wii in terms of installed base because of its very high price tag. Despite of the high manufacturing costs of PS3, Sony Computer Entertainment Inc. will lower the price of the system this April, an analyst said.

“Once the PS3 is at a more affordable price point, we think that sales of that device will once again begin to grow,” said analyst Michael Pachter from Wedbush Morgan Securities research company.

Sales of Sony PlayStation 3 have been slowing down in the recent months because of the high price and global economic problems, but Mr. Pachter believes that after generally slow first quarter Sony Computer Entertainment Inc. will reduce the price of the entry-level PS3 to $299, which is just $50 higher than the price of Nintendo Wii and is inline with the cost of Microsoft Xbox 360 60GB console.

The price-cut should boost popularity of the PS3, which retails for $399 today, among consumers who are cutting down their spending because of gloomy economic outlook. In fact, the analyst from Wedbush Morgan also expects Microsoft Corp. to reduce pricing of the X360 60GB to boost its popularity on the market.

“We expect another cut in price for the Xbox 360, with the feature-laden Pro model likely to come down in price to $249 at or before this year's E3 show in June,” said Mr. Pachter.

But the price-cut may not be exactly what Sony would like to do with the PlayStation 3. Each PS3 video game machine still costs $448 to build despite of the official price tag of $399, therefore, the manufacturer is losing money on every unit sold. Sony Group, the parent company of SCEI, is rumoured to post $1.12 billion loss in March for the fiscal year and Sony’s video game unit said earlier that this year the company will concentrate on making money, not cutting prices.

“The most important thing for us as a company in the very short term is for us to start making money. This is a pledge that was made last March and is something that we are still very much on target to achieve. Once we have achieved this, I think it will be a very exciting time for PlayStation. Once we have alleviated that specific pressure, we can move forward at a rate of knots,” said David Reeves, president of Sony Computer Entertainment Europe.

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