Matt Carroll
05-14-2002, 12:25 PM
Sony Cuts Price of PlayStation, PS2
By Ben Berkowitz
Reuters
LOS ANGELES (May 14) - Sony Corp said on Monday it cut the U.S. price of its PlayStation 2 game console by one-third and halved the price of its older PlayStation One, a preemptive move expected to touch off a round of discounting by rivals.
Effective immediately, the PS2 will cost $199 in the United States, down from $299, while the first-generation PSX will sell for $49, down from $99. Prices for accessories and extra controllers will also be reduced, Sony said in a statement.
Sony will also consider future price cuts on its game software, an executive said.
The cut comes as analysts, game publishers and retailers anticipate that Microsoft Corp will cut the price of its competing Xbox console, also currently $299, at the industry's Electronic Entertainment Expo, the major video game trade show, next week.
"It's not surprising that they want to get in front of Microsoft," said UBS Warburg analyst Mike Wallace. "Why else would Sony do it now?"
Sony said it was making the price cut now, as opposed to September as had been expected by some industry watchers, because it wanted to build momentum at the new discounted price well in advance of the year-end holiday season, the make-or-break period for video game sales.
"This way we can have some time so we can plan out the rest of the year with our retailers," Kaz Hirai, president of Sony Computer Entertainment of America, told Reuters.
At $199, the PS2 will be priced the same as Nintendo Co Ltd's GameCube, which does not have the DVD playback capabilities of the PS2 or as extensive a game library. The GameCube, like the Xbox, came out last November.
PS2 KEY TO SONY BOTTOM LINE
In early April, a senior Nintendo executive told Reuters the company would reconsider its GameCube pricing if Sony announced a price cut, especially to the $199 level.
Sony said last week it has sold more than 30 million PlayStation 2 units worldwide, giving it a more than 10-to-1 advantage over rival Microsoft in terms of installed game machines.
"We felt that, based on that great milestone, it was good for us and good for the platform to come up with a pricing announcement very close to that," Hirai said.
Sony earned an operating profit of 83 billion yen ($649 million) from its game division in the business year that ended in March, allowing it to post a net profit at a time when other consumer electronics makers were losing money because of the collapse in technology spending.
While the hardware is key for Sony, related software sales are just as important. The company publishes a number of games for its own console, which sell for up to $49.99.
Sony's Hirai said game software price may now be under consideration as well: "I think that as we move on the pricing for the hardware, I think we need to take an aggressive look at the software pricing too."
Another part of the PS2 strategy has been its expansion capabilities.
While the console does not have the built-in networking capabilities of the Xbox, Sony will release an adapter in August that will allow users to add online gameplay. Nintendo announced similar adapters for GameCube on Monday.
Sales of video game hardware, software and accessories topped $9 billion in the United States last year. Analysts and industry executives have said the industry is in the first year of a multi-year growth cycle driven by the three next-generation console
By Ben Berkowitz
Reuters
LOS ANGELES (May 14) - Sony Corp said on Monday it cut the U.S. price of its PlayStation 2 game console by one-third and halved the price of its older PlayStation One, a preemptive move expected to touch off a round of discounting by rivals.
Effective immediately, the PS2 will cost $199 in the United States, down from $299, while the first-generation PSX will sell for $49, down from $99. Prices for accessories and extra controllers will also be reduced, Sony said in a statement.
Sony will also consider future price cuts on its game software, an executive said.
The cut comes as analysts, game publishers and retailers anticipate that Microsoft Corp will cut the price of its competing Xbox console, also currently $299, at the industry's Electronic Entertainment Expo, the major video game trade show, next week.
"It's not surprising that they want to get in front of Microsoft," said UBS Warburg analyst Mike Wallace. "Why else would Sony do it now?"
Sony said it was making the price cut now, as opposed to September as had been expected by some industry watchers, because it wanted to build momentum at the new discounted price well in advance of the year-end holiday season, the make-or-break period for video game sales.
"This way we can have some time so we can plan out the rest of the year with our retailers," Kaz Hirai, president of Sony Computer Entertainment of America, told Reuters.
At $199, the PS2 will be priced the same as Nintendo Co Ltd's GameCube, which does not have the DVD playback capabilities of the PS2 or as extensive a game library. The GameCube, like the Xbox, came out last November.
PS2 KEY TO SONY BOTTOM LINE
In early April, a senior Nintendo executive told Reuters the company would reconsider its GameCube pricing if Sony announced a price cut, especially to the $199 level.
Sony said last week it has sold more than 30 million PlayStation 2 units worldwide, giving it a more than 10-to-1 advantage over rival Microsoft in terms of installed game machines.
"We felt that, based on that great milestone, it was good for us and good for the platform to come up with a pricing announcement very close to that," Hirai said.
Sony earned an operating profit of 83 billion yen ($649 million) from its game division in the business year that ended in March, allowing it to post a net profit at a time when other consumer electronics makers were losing money because of the collapse in technology spending.
While the hardware is key for Sony, related software sales are just as important. The company publishes a number of games for its own console, which sell for up to $49.99.
Sony's Hirai said game software price may now be under consideration as well: "I think that as we move on the pricing for the hardware, I think we need to take an aggressive look at the software pricing too."
Another part of the PS2 strategy has been its expansion capabilities.
While the console does not have the built-in networking capabilities of the Xbox, Sony will release an adapter in August that will allow users to add online gameplay. Nintendo announced similar adapters for GameCube on Monday.
Sales of video game hardware, software and accessories topped $9 billion in the United States last year. Analysts and industry executives have said the industry is in the first year of a multi-year growth cycle driven by the three next-generation console