Sony cuts PS2 price, shows off PSP - 149$

OS ANGELES, May 11 (Reuters) - Sony Corp. (Tokyo:6758.T - News; NYSE:SNE - News) on Tuesday cut the price of its leading PlayStation 2 video game console by up to 25 percent in the United States, matching the price of Microsoft Corp.'s (NasdaqNM:MSFT - News) Xbox, whose sales have soared recently following a similar move.

In a press conference at E3, the video game industry's annual trade show, Sony also showed off its upcoming PlayStation Portable handheld device which will play DVD-quality movies and music as well as games nearly as advanced as its market-leading console.

The PSP is the most significant hardware release in four years for Sony's games business, which accounts for two-thirds of the conglomerate's profits, and has helped offset heavy losses from its mainstay electronics business.

Sony said it would start promoting a new price of $149 for the PS2 in the United States, including an optional network adapter for online games. The stand-alone PS2 had been selling for $179, and for $199 with the adapter.

"We view the 2004 opportunity as really the year to cultivate the casual gaming market," Kaz Hirai, president and chief executive of Sony Computer Entertainment of America, told a packed audience at a downtown studio complex.

"There is plenty of room for growth as we expand our reach into the casual gaming market," he said.

Late in April, Sony forecast PS2 sales in the business year ending March 2005 would fall as much as 30 percent, a sharper decline than analysts had expected.

Industry analysts had suggested that if Sony did not lower the PS2 price to spur sales, U.S. software makers might find sales growth targets harder to reach.

As of Tuesday, Web sites of major online game retailers already reflected the new price. Sony has lowered the PS2 price in May for the past two years.


Sony also demonstrated the PlayStation Portable, first announced a year ago and set to be released by the end of 2004 in Japan and by March 2005 in the United States and Europe.

Sony did not set a price for the PSP or a firm release date. Ken Kutaragi, group CEO of Sony Computer Entertainment, told Reuters the company was likely to announce launch and pricing details around the Tokyo Game Show in late September.

The PSP, which will weigh in at just over 9 ounces (260 grams) and feature a 4.3-inch screen in a wide-screen format, will be targeted initially at men ages 18 to 34 years-old.

"The initial target audience for PSP is more reminiscent of our approach in the home console space," Hirai said, noting the PS2 went after the same group at its late-2000 launch.

The PSP uses Wi-Fi wireless networking and has battery life from 2 hours to 10 hours depending on usage.

Sony executives showed a number of games, a promotional trailer for the movie "Spider-Man 2" and a music video from the alternative rock band Incubus.

Sony executives said they would encourage movie and music companies to adopt its "UMD," a new disc designed for the PSP with about three times the data capacity of a standard CD.

In the online game arena. Hirai said Sony would begin offering services like hosting, billing, as well as unified login and passwords for Web-based video games.

He said Sony wants to generate revenue from what he called "mini-transactions" -- small extras downloaded into games or new features for games already on store shelves.

"Right now non-revenue-generating, head-to-head gameplay is the norm, but not for long," He said. "We believe revenue from online content will be a reality in this cycle."

Hirai said Sony is adding 100,000 new online users per month and the company was looking at a content-storage system for downloads on the PS2 that did not require use of the recently-released 40 gigabyte, PS2 hard drive.

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