Can a $100 discount double sales?
Sony hopes a $100 price cut will boost sales of its beleaguered Playstation 3.
Japanese tech giant confirmed Monday that it will now sell the videogame console for $499, a $100 price cut. The new price is effective only in North America.
Sony is also introducing a new, higher-end version with a bigger hard drive and a free game included for $599.
Rumors popped up online last week that a console price cut was imminent.
Observers have blamed the high price for the PS3’s poor sales since its November launch. Microsoft’s Xbox 360 costs $399 for the most popular version; unlike the PS3, it doesn’t play high definition DVDs, but otherwise has similar capabilities. Nintendo’s Wii, which isn’t nearly as powerful as the other two consoles, costs only $249 and is easily outselling its competitors.
In May, Nintendo sold 338,000 Wiis in the U.S. and Canada, while Microsoft sold 155,000 Xbox 360s and Sony sold just 82,000 PS3s, according to the NPD group.
Move will likely be welcomed by every movie studio except Universal. Because the PS3 plays Blu-ray DVDs, all studios that support the format are counting on the PS3 to be a key driver of disc sales. At $500, the PS3 is the same price at the cheapest stand-alone Blu-ray player.
Sony Computer Entertainment America topper Jack Tretton told Reuters that he expects the price cut to “double sales at a minimum.”
Though Tretton said the move was enabled by more efficient production, it will not help Sony’s bottom line. In the first quarter of the year, conglom’s vidgame division had an operating loss of $1.9 billion due to costs around the launch of the PS3 and slow sales.
By making the announcement two days before the E3 videogame confab opens, Sony aims to steal some of its competitors’ thunder and focus on its upcoming slate of games, instead of price concerns, during its Wednesday press conference.
Many gamers have noted that beyond reducing the price, Sony needs to roll out a more compelling lineup of exclusive titles in order to make the PS3 a “must buy.”
Some industryites believe Microsoft may cut the price of the Xbox 360 during its Tuesday evening press conference in a bid to remain less expensive than the PS3.
Microsoft is already under pressure after it admitted last week that so many 360s are defective that will take a write boff of over $1 billion to pay for repairs and an extended warranty. (Daily Variety, July 6)
By introducing a higher end PS3 with an 80 gigabyte hard drive, Sony is also signaling that it intends to expand its slate of downloadable content. That includes games and, insiders confirm, video content such as movies and TV shows.
Microsoft in April made a similar move by launching the Xbox 360 Elite, which costs $479 and has a 120 gigabyte hard drive.