Contrary to previous reports, the struggling U.S. economy could force Microsoft and Sony to drastically slash console prices if they wish to remain competitive in the market, analysts said Thursday.
Previously, it was speculated that the sagging U.S. dollar meant Sony would be unable to reduce the price of the PlayStation 3.
But Activision CEO Robert Kotick doesn't think that scenario will wash. In comments made to Reuters Wednesday, Kotick said everything from rising fuel costs to the housing slump will make it more difficult to purchase a $399 video game console.
Over at Next Generation, games industry journalism go-to analyst Michael Pachter was inclined to agree--with a few caveats.
"Demand is really the key," Pachter said. "Bobby's comments suggest that the U.S. recession would trigger a decline in demand for consoles. He may be right, but we've seen no slowdown whatsoever."
Who Cuts First?
If it does come to price cuts, Pachter believed Sony will be the first to budge, possibly by as much as $100 in October to coincide with the Tokyo Game Show. Microsoft would follow suit with a $50 cut of its own to keep the Xbox 360 competitively priced against its rival.
As for Nintendo, president Satoru Iwata himself dismissed such a move for the remainder of 2008 during an earnings call in April.
"My best guess is that they will unbundle Wii Sports from the console first, and cut the price of the console only to $199, making it appear that there was a price cut," Pachter said. "If Sony cuts to $299, I think Nintendo may consider a cut."
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