Sony Computer Entertainment America slashed the cost of its PlayStation console by $20 to $129 in June, and on Tuesday announced the same discounts on its PlayStation package with new, more advanced game controllers.
No. 2 Nintendo also trimmed prices earlier this summer, offering consumers a $22 rebate on its $150 Nintendo 64 system.
"There is no weakness in this market. If they didn't go to the lower prices, they would still have a great Christmas," said Sean McGowan, a toy analyst at Gerard Klauer Mattison.
"But consumers expect prices to come down, and since they went to the lower prices, there's been a significant uptick in sales," he said.
Under the pricing plan announced Tuesday by Sony, the cost of its game consoles packaged with its Dual Shock controller will fall by $20 to $129. The new joy sticks use force feedback, enabling players to feel an increased vibration in their hands as the games become more intense.
In addition, Sony will lower prices on some games, including popular hits like Crash Bandicoot 2 and Jet Moto 2, as well as taking a big reduction on many console accessories, like television adapters and controllers.
Since making its first price cuts earlier this year, Sony said sales so far this year have almost doubled from a year ago, with gains especially strong in the traditionally slow summer months.
Sales of video games rose 50 percent to $3.80 billion last year from 1996, mostly due to strong sales of Sony and Nintendo products. While the Nintendo system is more technologically sophisticated, Sony has a wider array of software.
Market leader Sony has sold more than 11.5 million PlayStation consoles in North America, and software sales exceed 85 million units.
Analysts expect another strong year in 1998, but see sales growth slowing in coming years as consumers look for newer, high-tech products.
Since the video game systems are no longer a novelty, lower prices are a seen as a way to continue to draw consumer interest. Sony PlayStation was released in September 1995, and Nintendo came out with Nintendo 64 a year later.
There will be competition late next year, when Sega Enterprises Ltd. is expected to release its new game console that will work with software coming from Microsoft. Also coming down in price are computers that retail for under $400 and offer a lot more than games.
Written By Rachel Beck