The PS3 Goes on Fire Sale

By Anders Bylund
August 19, 2009 | Comments (7)

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"The time to act is now, Sony (NYSE: SNE). Give me cheaper systems or give me death. For your sake, I hope that the rumors of a less expensive PS3 Slim model are correct."
-- Me, six weeks ago

"All right already, you can have your Slims. And we're dropping PS3 prices across the board, just to rub it in. Happy now?"
-- Sony, today

OK, maybe Sony executives don't run their business based on Foolish advice. Still, a svelter incarnation of the brawny, beastly PlayStation 3 is coming in a few weeks, and it's bringing a skinnier price along with it. Current PS3 models with 80GB of hard drive space have already dropped from $400 to $300 apiece at major retailers like Amazon.com (Nasdaq: AMZN). The 120GB Slim lands stateside the first week of September at the same $300 price point.

These price cuts are long overdue, and they should kickstart Sony's hardware sales with a bang. Microsoft (Nasdaq: MSFT) introduced a cheaper Xbox 360 a long time ago, and the Nintendo (OTC BB: NTDOY.PK) Wii was never a $400 monster. The components that go into these video game systems have only gotten cheaper over the years. It simply makes sense to pass the savings along to consumers in order to juice volume sales. Game title license fees, not console revenue, make the world go 'round, anyway.

This will make Activision Blizzard (Nasdaq: ATVI) chief Bob Kotick very happy. Activision's Call of Duty franchise is one of the biggest sellers on the PS3 platform, alongside Take-Two Interactive's (Nasdaq: TTWO) Grand Theft Auto series and Konami's (NYSE: KNM) Metal Gear Solid. The high-powered graphics of the PS3 and Xbox 360 appeal to a hardcore gamer crowd with a thirst for wargaming blood and guts. Expanding the installed user base of the systems itself will also grow the potential customer base for many of these hard-boiled game franchises. By extension, Sony's price cuts are good news for the video game market as a whole.

For $300, you can now get a Blu-ray player that also lets you play some pretty cool games. Would you buy a PS3 Slim at these prices? Let the three-way crossfire begin in the comments box below.

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Take-Two Interactive Software is a Motley Fool Rule Breakers recommendation. Amazon.com, Activision Blizzard, and Nintendo are Motley Fool Stock Advisor selections. Microsoft is a Motley Fool Inside Value recommendation. Nintendo is a Motley Fool Global Gains pick. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Take-Two, but he holds no other position in any of the companies discussed here. He sincerely doubts that Sony's top brass hangs around at the Fool. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 19, 2009, at 12:38 PM, TheDrake2 wrote:

    If only they (Sony) would have brought back the backwards compatibility with PS2 and PS1, I would have put in my pre-order for a PS3 slim.

  • Report this Comment On August 19, 2009, at 1:35 PM, buddyleej wrote:

    The ps3 will play every ps1 game right now. Whats the point of throwing in ps2 compatibility when they are still selling them for 100 bucks brand new? This is the best value of any video game system out there. Blu Ray, blu tooth, built in wireless, a free playstation network, and a lineup of games that can now go toe to toe with Microsoft.

  • Report this Comment On August 19, 2009, at 1:53 PM, gaucho420 wrote:

    I agree, this is the best value out there right now. I'm a 360 & Wii owner, but my 360 has already broken down once due to the RRoD. If it happens again, I'm switching to the PS3...paying for the 360 & its over 50% failure rate (per a Gameinformer survey this month of its readers) makes me feel like a damn chump.

    Now that Sony has offered a reliable alternative, MSFT better hope my new 360 stays working or my dough is headed elsewhere.

    For whatever its worth though, I beleive the future of gaming is with motion controls and that 360/PS3 style of gaming is doomed to die within a few generations.

  • Report this Comment On August 19, 2009, at 1:55 PM, GordonGeckoIII wrote:

    I bought my PS3 in December, 2008. My Xbox 360 died in February, 2009 (3 red lights of death). Considering how huge an Xbox fan I am, I think it's quite telling that I haven't bothered to get the Xbox fixed now that I have my PS3. With more people on-line, things will only get better...

  • Report this Comment On August 19, 2009, at 2:04 PM, duanes1967 wrote:

    I am the happy owner of an 80gb PS3 from Christmas 08. I previously had an XBox (original) and constantly had problems with lockups and CD-Rom not reading. The real choice was PS3 or Wii, but the Blu-Ray sold the deal.

    Now we use Netflix and Hulu ( Thank you PlayOn! ) and love it. I wish that Netflix had not sold out to MS, but when someone throws a ton of money at you... what do you do?

    The only minor bother is if the PS3 is turned on before the HDMI attached TV, the PS3 apparently defaults back to other video outputs. You have to completely turn off the PS3 power and Cold boot in order to get the PS3 to hunt for the HDMI connection again.

  • Report this Comment On August 19, 2009, at 3:29 PM, tgolsen wrote:

    The one that piques my interest here is ATVI. Call of Duty 4: Modern Warfare sold 12 million units. Activision says that the game is the "best-selling first-person action game of all time."

    The buzz around Modern Warfare 2 is incredible and with an increased install base the game is sure to sell lots more. ATVI has another winner in the pipe with StarCraft 2 coming in March 2010 (PC). Infinity Ward and Blizzard don't often disappoint. I expect good things.

    They say invest in what you know .. I and those like myself (I'm a 27 year old male professional for your statistics) are ready to shell out for these two titles just as soon as we can. Maybe I can make that back riding this wave.

  • Report this Comment On August 20, 2009, at 11:16 AM, Goonered wrote:

    I have been waiting for PS3 prices to drop for 2 years now. I will be buying one the day it is released.

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