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Sony Slashes Playstation Prices

14 May, 2002 By: Holly J. Wagner

Sony Computer Entertainment America Inc. has pulled off the gloves in the video game duel, dropping the price on its PlayStation2 game console to $199 effective immediately, knocking off a third of its original $299 suggested retail price (SRP).

The company also knocked the price of PS One consoles to the floor with a 50 percent reduction to $49 SRP.

"Sony's price cuts are clearly the first shot across the bow in the latest battle in the video game wars, that unlike their console counterparts, are real and not virtual. With billions of dollars at stake long term, Microsoft and Nintendo will no doubt follow suit and lower prices as the race is on to grab market share," said Michael Gartenberg, research director with Jupiter Research. "Despite the hype, online console gaming will still be relegated to a very small segment of the market this year as vendors continue to search for viable business models that refine ease of use for consumers. In the meantime, the lower console prices will benefit consumers who have sat on the sidelines waiting for more affordable systems and will please developers who hope that this will spur normally sluggish summer sales. The final battle won't be fought until later this year, when extended marketing efforts by all three vendors will hope to sway consumers for the all important fall holiday buying season."

Sony recently achieved cumulative worldwide shipments of 30 million units for the consoles – claiming a PlayStation or PS one console in one out of every three U.S. households in North America -- and expects “to drive consumer interest in PlayStation 2 to unforeseen levels” with the price cut.

“The $199 price point for PlayStation 2 has always been part of Sony Computer Entertainment America's strategy to bring the world's leading computer entertainment system to the broadest audience,” said Kaz Hirai, president and COO, Sony Computer Entertainment America “As we currently stand, our company has shipped more than 30 million PlayStation 2 units, and 90 million PlayStation/PS one consoles worldwide. With the popularity of the PlayStation brand breaking all industry expectations, Sony Computer Entertainment has been able to grow the computer entertainment category as a whole representing tremendous opportunities for our partners and ultimately, for the consumer.”

The lower price for PS One systems puts them in direct competition with the discontinued Sega Dreamcast consoles available at the same price.

According to a Jupiter Consumer Survey, video game system owners look at price (46 percent) and selection of exclusive games (44 percent) when deciding which new console to purchase.

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