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Analyst: Sony Should Consider PS3 Price Cuts In Tough Holiday Battle

Analyst: Sony Should Consider PS3 Price Cuts In Tough Holiday Battle Exclusive

October 8, 2008 | By Leigh Alexander

With production costs still a formidable challenge, Sony has said not to expect Christmas price cuts for the PlayStation 3 -- but EEDAR analyst Jesse Divnich believes the PS3 may be taking a big hit from recent Xbox 360 price reductions.

Ahead of September's NPD results expected next week, analysts are bracing for a mixed bag in video game performance. The month's results are expected to suffer greatly in year-over-year comparisons to last year's September, when Halo 3 saw its record-breaking launch.

Despite this, Divnich estimates that Xbox 360 sold 320,000 units in September -- a new monthly record for the console, and a 31 percent weekly sales increase over August. On the other hand, Divnich anticipates PS3 sales to decline 7 percent to 43,000 units a week.

While the analyst says the surge in sales is largely attributable to mainstream consumers attracted to the Xbox 360 Arcade SKU's sub-$200 price point, Divnich warns the monthly NPD may turn out to show the PS3 suffering by comparison.

"We still urge Sony to consider a possible hardware price cut this holiday season," says Divnich. If September hardware sales fall below our estimate (under 200,000 units), it could be an indication that the Xbox 360 price cut played a bigger role on hindering PS3 sales than what we originally expected."

In stating that it had no plans to reduce PS3 prices, Sony has instead touted its software lineup as its primary strength for the crucial holiday season. While Divnich agrees that titles like Resistance 2 and LittleBigPlanet are likely to drive core adoption of the PS3, he also expressed "doubts that either title will lure in casual and mainstream gamers."

"The $399 price point is simply too steep to entice the casual and mainstream markets, regardless of how great Resistance 2 and LittleBigPlanet may be," he says.

Moreover, Divnich anticipates that Gears of War 2 will be the season's top-selling game -- and if the rest of Microsoft's first-party software outperforms Sony's in quality and popularity, it could spell further trouble for the PS3.

"We could begin to see a considerable amount of potential PS3 owners, who may be waiting for a PS3 price cut, to choose the Xbox 360 over the PS3," says Divnich.

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