As everyones attention was on the Electronic Entertainment Expo, the game industry's main trade show, which kicks off May 22 in Los Angeles, Sony jumped the gun and announced radical price cuts for the US prices of the PS2 and PS. As of Tuesday the PS2 costs US$199, down from US$299, while the PSX is now available for a mere US$49, down from US$99. Reductions in the prices of various accessory items and extra controllers were also announced, while software price cuts are also being considered.
Although Sony were expected to cut prices in September, they decided to demonstrate how serious they are about maintaining their current console market dominance. Officially Sony claim that they announced the price cuts at this time in order to prepare the market for the upcoming August high-season. It is however, obvious that Sony are turning up the heat on Microsoft whose sales have dropped off and who are already losing money from XBox sales even though their offering retails at US$299.
It is now extremely likely that at the Electronic Entertainment Expo, Microsoft and Nintendo will both announce their own price cuts. The price of the XBox is expected to follow that of the PS2 to US$199 while Microsoft are also expected to announce the launch of their online subscription based service. Using the Xbox's built-in Ethernet adapter, members of the service will be able to play each other online. Analysts suggest that the online service is Microsoft's biggest gamble and expect the initial take-up rate of the service to be low. According to the same analysts only 10 percent of XBox owners are expected to join in the first year.
Sony and Nintendo are also moving towards providing online services and despite the well founded criticism it is very likely that the future of the consoles lies with online gameplay.