AUG. 18, 2009 • Sony Computer Entertainment cut the price of the PlayStation 3 25% to $299, and confirmed the arrival of the long-rumored PS3 Slim on Sept. 1. Reports indicated that Sony has been clearing existing PS3 stocks worldwide for weeks. The original model debuted at $599 with a 60GB hard drive. The Slim arrives with a 120GB hard drive plus a smaller, less expensive, cooler running 45-nanometer Cell processor.  The new CPU Is expected to be faster than its predecessor, but Sony did not release its clock speed. The Slim is not backwards compatible with PS3 titles. As of June 30, the PS3 installed base stood at 23.8 million worldwide. In related news, Sony’s video download store will  launch in the France, Germany, Spain and the U.K. in November. More European countries will be added in 2010. HD and SD movies will be provided first, with local content to follow.  In September, €20 and €50 PlayStation network cards will go on sale.

Impact: DFC’s forecast for the PlayStation 3 had built-in a price drop to $300 for the 2009 holiday season.  We felt that this price drop was critical for the PS3 to remain competitive.  The drop gives the system a new lease on life.  We are hoping to see an aggressive marketing campaign from SCEA this fall.  However, the biggest battleground we will be watching is in Europe.