Analyst Urges PS3 Price Cut

Update from: Added SCEA response.

PlayStation 3 has been fighting tooth and nail with Xbox 360 month after month in the high-def console race.

But Electronic Entertainment Design and Research analyst Jesse Divnich fears that the price disparity between the $199 Xbox 360 Arcade and $399 PS3 will be a turn-off for potential mainstream Sony consumers in the U.S. this holiday.

"We still urge Sony to consider a possible hardware price cut this holiday season," he wrote in a research note. "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."

Microsoft dropped the price of its entire three-model Xbox 360 line in early September, with the low-end Arcade reaching the coveted sub-$200 price point.

Due to the price cut, Divnich expects Xbox 360 sales to rise month-on-month by 31 percent to 300,000 units during September in the U.S.

PS3 sales are estimated to have dropped 7 percent to 43,000 units per week during the month.

Sony has reiterated this year that it would not be dropping the price of the PS3 for the holidays.

Patrick Seybold, director of corporate communications at SCEA told Edge in an e-mail that he expects PS3 to maintain the momentum it has gained against Xbox 360 throughout 2008.

"As previously discussed we aren't making any price moves this holiday season. In my opinion, we have the best line up of any PlayStation generation going into this holiday and consumers will be very receptive to it," Seybold stated.

"With PS3 titles for this including Resistance 2, LittleBigPlanet, SOCOM, MotorStorm: Pacific Rift to name but a few of our multiple exclusives, combined with PlayStation Home and increasing multimedia features for the hardware, we expect to have continued momentum going into and beyond this holiday season."

Divnich added, "We should note that if Microsoft’s first-party titles perform significantly better in quality and popularity than Sony’s this holiday season, 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.

"Currently, we expect Gears of War 2 to be the single best selling SKU this holiday season."

The analyst noted that PS3 exclusives Resistance 2 and LittleBigPlanet will drive sales in the core market, but said they'd do little to reach mainstream audiences due to PS3 hardware price tags.

"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 stated.