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Analyst: $100 PS3 Price Cut By Summer's End

Analyst: $100 PS3 Price Cut By Summer's End

May 14, 2009 | By Leigh Alexander

Sony's planning for a 30 percent boost in PlayStation 3 sales for its fiscal 2010 -- and that could mean the company's planning for a price cut soon, says Lazard Capital Markets analyst Colin Sebastian.

Sebastian says Sony could reduce the console's $399 price "likely at some point between the E3 industry conference in June and the end of the summer, as Sony is able to reduce PS3 production costs."

The amount by which Sony would price down the console is still in debate, but Sebastian joins other analysts, retailers like GameStop and publishers in suggesting that it must be a $100 reduction to "provide the PS3 with a needed shot in the arm." The analyst also says the "sweet spot" for console sales is below $300, so any less than a $100 price cut "would likely be perceived negatively by the market."

"In addition to a $100 price reduction, which would put the PS3 in easier reach of a mass market audience, we note that Sony has a healthy lineup of upcoming first-party video games planned over the next year, including inFAMOUS, God of War III, Heavy Rain, Uncharted 2 and Gran Turismo 5," says Sebastian.

And a PS3 price cut would be a positive for publishers, which may be why execs at companies like THQ and Activision have urged reductions.
Price cut would also be positive on the margin for software publishers and GameStop, given lackluster sell-through thus far of the PS3 and the potential for price cuts to generate additional consumer interest in the platform and PS3 software.

"For Sony PlayStation, we believe the next 12 months are critical to regain market share, particularly with Nintendo losing some momentum near- term, and with Microsoft likely introducing a new gesture-based user interface," adds Sebastian.

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