Sony cuts price of PlayStation 2, but not PS3

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By REUTERS

* Price cut is 23 percent to $99.99

* Previous price was $129.99

* Sony says no plans to retire the PS2

(Adds Sony executive comment, Microsoft comment, background, byline)

By Franklin Paul

NEW YORK (Reuters) - Sony Corp said it cut the price of its older video game console, the PlayStation 2, by 23 percent to $99.99, in an attempt to woo budget-minded families.

The price cut, effective April 1, could sustain the life of the PS2, which has sold more than 136 million units since its debut in 2000, making it the world's most popular gaming system, Sony said Tuesday.

The news follows -- and momentarily puts to rest -- rumors on video gaming websites and blogs that Sony might cut the price of the PlayStation 3, its more powerful console. The PS3's least expensive model sells for about $400.

Sony said that the sub-$100 PS2 price will draw in a new wave of customers ranging from lower-income families to gamers who may have passed on pricier new systems. In addition, it may give incentive to retailers to keep the PS2 on store shelves.

Sony dominated the global video game industry for a decade starting in the mid-1990s, but sales of the PS3 have lagged behind those of Nintendo Co Ltd's Wii console and Microsoft Corp's Xbox 360.

Microsoft's sales got a boost in September after it cut prices on some Xbox 360 models by about $50. The company said it sold 28 million units worldwide in 2008, outpacing the PS3 by over 8 million units.

While still considered pricey, video game consoles continue to post robust sales even as consumers think twice about discretionary spending amid the recession.

Most generations of new consoles are retired after about a decade, when developers move on to focus on more advance machines. Not true for the PS2, which sold some 2.5 million units in the U.S. alone last year and remains profitable for Sony even at the new price level, according to John Koller, hardware marketing director at Sony Computer Entertainment.

He said that developers are making plans for the system as much as 3 years out, with up to 80 new games in the works for the system this year and another 70-80 due in 2010.

"There is no reason to slow down any of the momentum on the console now," he said. "There is no retirement tour or clock on the wall. As long as it continues to sell at the viable levels that it is, we are going to sell and market the platform."

Asked to comment on any plans that Sony has for cutting the price of the PS3, Koller said: "We feel good about where PlayStation 3 is. We continue to monitor the business."

Despite the resilience of the PS2, so-called "next generation" consoles are still the industry's first priority. The PS3, Xbox 360 and Wii are often centerpieces in the home that can deliver many hours of disc-based, online and collaborative gaming. All but the Wii play DVDs and can stream Internet movies.

Accordingly, Microsoft said Sony's PS2 price cut does not address the future of the video game industry.

"We believe, however, that the future lies in the growth of current generation consoles and Xbox 360, as the fastest growing games console last year ... will continue to drive the market," said Microsoft's Chris Lewis, regional vice president of Interactive Entertainment Business in Europe. (Reporting by Franklin Paul; editing by John Wallace and Gerald E. McCormick) (To read more about our Media news, visit out MediaFile blog online at http://blogs.reuters.com/mediafile)

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