Sony swings at Microsoft, cuts Playstation price

Sony drops cost of PlayStation by $50

Sony has thrown the first punch in the video game industry's annual holiday slugfest.

The company on Thursday cut the price of its PlayStation 4 console by $50 to $349.99, effective Friday. The move brings the system to the same price as Microsoft's Xbox One — but could further tip sales in Sony's favor.

Microsoft, in many ways, has the superior game lineup this holiday season. Along with multiplatform titles like "Call of Duty: Black Ops III" and "Star Wars: Battlefront," it has exclusives like "Halo 5: Guardians" and "Rise of the Tomb Raider." Analysts had said this created a big opportunity for the company to close the sales gap with Sony.

But Sony's price cut could be an effective counter move. The PS4 has held a commanding sales lead in this generation of consoles — and continues to have a better buzz with a large swath of players.

The PS4 sold more than 25 million units worldwide from November 2013 through the end of July, and Sony has said it expected to sell 16.5 million units this fiscal year. Microsoft, meanwhile, hasn't given an update on Xbox One sales since November, when it hit 10 million.

"Our goal at PlayStation has always been to offer the best place to play at a compelling value to gamers," said Shawn Layden, president and CEO of Sony computer Entertainment America. "We're continuing to deliver on that commitment with this new price for PS4, making the console even more accessible to a broader audience this holiday."

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The price cut is compounded when it's factored in with the many game bundles Sony is offering this holiday season. For the same $350 price, players will also be able to get a free copy of either "Uncharted: The Nathan Drake Collection" or "Star Wars: Battlefront," which is expected to be one of the year's top selling titles.

Sony started this generation of consoles with a big price advantage over Microsoft. The PS4 originally cost roughly $400, while the Xbox One was initially $500. That, combined with a poorly executed introduction of Microsoft's system, allowed Sony to quickly take the sales lead.

Microsoft fought back last year, cutting the Xbox One price to $349. The move worked, to an extent. Microsoft, in a statement citing NPD data, announced in January that the Xbox One was the industry's best-selling system in November and December of 2014.

"[The] weekly average sales during these months outpaced Xbox 360 by 50 percent at the same point in its lifecycle," the company said.

Despite that, the PS4 maintained a commanding overall sales lead — and retook the top sales spot soon after.

Competitors play Call of Duty Advanced Warfare during the ESWC (Electronic Sports World Cup) on May 2, 2015 in Paris.
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At this point in the life cycle of this generation of game systems, the focus begins to shift away from core gamers to the larger mainstream audience. Many households have not upgraded their PlayStation 3 or Xbox 360 because of the price of newer systems and a comparatively small catalog of games. But publishers are dropping support for those legacy systems and focusing resources on the current generation, which is when the broad shift begins to occur — and that's when system price is doubly important.

"Many of the enthusiasts are taken care of," said John Taylor, managing director of Arcadia Investment. "[Microsoft, Sony and Nintendo] are going to have to start broadening the audience into more households with kids. They need to figure out ... how we're going to keep the hardware momentum going."