Sony Corp. is under pressure from video game publishers to cut the price of the PlayStation 3 console, or risk seeing more development funds shift to Nintendo Co.'s Wii.
To quote: PS3 sales in the next 12 months are likely to total 14 million, compared with 28 million Wiis and 9.7 million Xbox 360s, according to the Daiwa Institute of Research, a Tokyo-based researcher and consultant.
Price cuts have an immediate impact.
Sony reduced the PS3 price from $499.99 in October 2007 and sales more than doubled in the next month. In September, Redmond, Washington-based Microsoft released its lowest-priced Xbox 360, at $199.99. The company almost doubled Sony's U.S. shipments from October to January after trailing PS3 in the prior three months, NPD data show.
"Anytime a console manufacturer reduces the price, software publishers benefit," Yves Guillemot, chief executive officer of Ubisoft Entertainment SA, Europe's largest video-game maker, said in an e-mail.
Game makers now focus development in two directions: one for the top-selling Wii and the other for Xbox 360, PS3 and personal computers.
Titles for Microsoft and Sony are typically more expensive to produce. Sony posts a loss on each console it makes at the current price, according to researcher iSuppli Corp.
"The publishers need the PS3 install base to grow in order for most of these games to be profitable," said Evan Wilson, an analyst at Pacific Crest Securities in Portland, Oregon. "It's an easy equation for them, but it's very different from the one that Sony has to take on."
More PlayStation 3 News...