Japan gets a break on Sony PlayStation

September 23, 2006|By Bloomberg News

TOKYO -- Sony Corp., the world's biggest maker of video-game players, cut the price in Japan of its PlayStation 3 by about 20 percent, responding to complaints it cost twice as much as Microsoft Corp. and Nintendo Co. consoles.

The game player will retail for 49,980 yen ($430) when it goes on sale Nov. 11, Ken Kutaragi, head of Sony Computer Entertainment Inc., said at the Tokyo Game Show yesterday. The company previously said it would sell the cheapest model for 59,800 yen, excluding tax.

"They had to cut it because rivals have lower prices, and they may lower the price again if sales don't go well," said Yoku Ihara, head of equity research at Retela Crea Securities Co. in Tokyo. "Sony should have looked further ahead before they announced the PS3 price in the first place" in May.

Sony Chief Executive Officer Howard Stringer is relying on the PlayStation 3 to revive a company that has lost half its market value in the past six years. The price cut leaves the console, which comes equipped with a high-definition Blu-ray DVD player and a fast processor called the Cell, as the most expensive game on the market.

"The Japanese users and media would not stop saying a price tag of over 60,000 yen, including tax, was too expensive," Kutaragi told reporters yesterday.

Shares of Sony fell 1.9 percent to 4,770 yen at the 3 p.m. close yesterday on the Tokyo Stock Exchange. The stock has declined 12 percent in the past six months, compared with a 5.2 percent drop in the benchmark Nikkei 225 stock average.

"If you consider the PlayStation 3 a toy, then yes, it is an expensive toy," Kutaragi said in an interview with Japanese game magazine Famitsu in May. "The PlayStation and PlayStation 2 were both 10,000 yen more than their competitors at launch, yet they both sold to shortages."

Microsoft this month said it will start selling a cheaper Xbox 360 in Japan for 29,800 yen on Nov. 2, while Nintendo is offering its Wii console for 25,000 yen.

"The outstanding features of the PS3 are the outstanding graphics and the outstanding price," Hirokazu Hamamura told reporters yesterday in Tokyo.

"The graphics capability is probably two generations ahead of the other consoles," Hamamura said.

Sony forecast costs of developing the PlayStation 3 will widen the games division's losses this quarter and may take five years to recoup. More than five million Microsoft Xbox 360 players had been sold worldwide as of June, since its introduction last November.

Like rival Microsoft, Sony expects losses on console sales to be made back through sales of game software and related licensing fees.

Sony said yesterday that at least six of the 36 games it displayed at the Tokyo Game Show will go on sale the same day the PS3 debuts. "Resistance" and one other will be made by Sony. "Ridge Racer 7" and "Mobile Suit Gundam" are produced by Namco Bandai Holdings Inc., while Konami Corp. will offer a mahjong game and Sega Corp. will have a golfing title for sale by the Playstation 3's first day out.

Konami's game will sell for 4,980 yen; the others didn't disclose prices.

Sony on Sept. 6 said it will delay the European release of its PlayStation 3 by four months until March and cut its 2006 global shipment target by half to 2 million.

The delay is due to problems with Sony's blue diode laser, the key component of the Blu-ray player included in the console that reads information on the disc, the company said. A Blu-ray disc can store at least five times more than the 4.7-gigabyte standard DVD. The PlayStation 3 comes with an HDMI connection for high-definition content, Kutaragi said yesterday, announcing that the feature was being added to the cheaper model as well.

"It's a great opportunity for us" in Europe, Peter Moore, corporate vice president of Microsoft's interactive entertainment unit, said in an interview in Tokyo.

The PlayStation 3 will make its debut in Japan on Nov. 11 and in the U.S. on Nov. 17. Nintendo's Wii console will go on sale on Nov. 19 in the U.S. and Dec. 2 in Japan.

Sony's price reduction "is negative for the short term because the company may not be able to sell enough consoles to cover an instant loss caused by the price cut," said Naoki Fujiwara, who oversees $720 million in assets at Shinkin Asset Management Co. in Tokyo.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.