Price Cut Announcement For PS3 Expected This Week

Janco Partners analyst Mike Hickey writes that “recent channel checks indicate increased speculation for a PS3 price cut announcement from Sony in the next couple of days.”

Sony is scheduled to meet with retailers this week at the annual Destination PlayStation conference. Says Mike Hickey, “We think the company needs to reduce the current price by $100 to effectively restart unit velocity at retail.”

He continues further:

“We are also hearing continued speculation that Sony is working on a non-Blu-ray PS3 console, which could enable them to make the aforementioned hardware price reduction. We believe the market is expecting a PS3 price cut in April or by June (E3) at the latest, so a near term aggressive pricing decision by Sony could provide a positive catalyst for video game related stocks including GameStop, Activision and Take-Two Interactive. If Sony does not cut the price of their console, we expect the continuation of languishing PS3 hardware sales and the potential for publishers to accelerate their reallocation of resources away from the PS3 console.”

Certainly a price cut would be necessary to ensure that the PlayStation stays as competitive or more competitive than its core rivals, the Nintendo Wii and the Xbox 360. Sony has already secured its grip on the high-definition market by thrusting its Blu-Ray format to the fore, and it already makes use of the extra space available on the Blu-format disc – a significant technology advantage over its competitors.

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