October 12, 2008 7:52 pm

Sony rules out PS3 price cut for Christmas

Sony, the Japanese consumer electronics group, has ruled out cutting the price of the PlayStation 3 console before Christmas, insisting that the PS3 is better value than rivals half its price.

“The answer is yes, if you’re asking, ‘Are these the prices we’re going with this Christmas?’” said Kazuo Hirai, president and group chief executive of Sony Computer Entertainment, in an interview with the Financial Times.

Up to half of all video game sales are made in the run-up to Christmas and Sony is gambling that despite the weak economy, consumers will not just buy the cheapest machine. If they do, Sony could lose further ground to Nintendo’s Wii and to Microsoft’s entry-level Xbox 360, which sells for $199 in the US after a price cut in September – half the $399 cost of the cheapest PS3.

Mr Hirai argues that the basic Xbox has no hard disk drive while the PS3 plays high-definition Blu-Ray movies as standard. “When you really compare apples to apples, then I think we have a very good value proposition,” he said.

Sony, launched its third PlayStation model in the line in November 2006. The PS3 competes most directly with the Xbox 360. Both are high-powered consoles that have sold well to gaming enthusiasts, but neither has matched the casual appeal and rapid success of the much cheaper Wii.

Two years after launch, Mr Hirai is keen to broaden sales but said “we’re getting to the point where price becomes more important”.

Sony has opted to include more with each PS3 rather than sell the console for less. Last week it said the main model marketed in Japan would come with a bundled game and an 80-gigabyte hard disk, up from 40GB, at the same Y39,980 price.

Another important upgrade would be ‘Home’, Sony’s long-delayed online community in which users will be able to maintain their own apartment and socialise in a three-dimensional world.

“We’re going online with an open beta [version] by the end of this year,” Mr Hirai said, but there is no date for a full launch.

In common with the rest of the industry, Mr Hirai expects video games to be resilient in the economic downturn, as consumers buy cheap home entertainment rather than go out.

“As long as we can generate excitement, then we will be less affected than other industries,” he said.

Meanwhile, the president of one of Japan’s largest game developers said the credit problems are having an effect. Fumiaki Tanaka, the head of Konami Digital Entertainment, told the FT that some of the company’s distributors are struggling to fund their operations.

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