Rivals cut costs in face of Sega console launch

Nintendo and Sony have slashed their console prices to £79.99 in a pre-emptive strike against rival Sega's forthcoming Dreamcast machine.

The PlayStation and N64 price cuts hit the high street last week and have been seen as an attempt to steal Sega's thunder for its Dreamcast launch on 23 September.

Dave Butler, console buyer for Department One, said: "Everyone knew there would be a price drop before the Dreamcast launch and have been waiting a long time for it. This is going to be PlayStation's last Christmas."

But he predicted that Nintendo will struggle during the festive season: "It will be fighting Sony, which has the installed base and industry backing, and Dreamcast, which is sure to generate a lot of interest."

Another console buyer voiced further concerns regarding Nintendo: "The consumer will perceive £79.99 for the console on its own as a price rise.

It was bundled with GoldenEye for £100 - the consumer saw a game worth £50 and the console at £50. The bundling of Star Wars at £120 was seen by the public as a price hike for the console to £70 and that resulted in a sales slump. It will happen again now."

Ray MacGuire, managing director of Sony Computer Entertainment UK, claimed: "PlayStation has expanded the gaming market, creating a diverse customer base. This price level will secure the next million PlayStation homes by this Christmas."

James Cooke, games manager at HMV, said: "The price drop is very exciting and it will push sales past the five million mark in the UK. It will definitely strengthen Sony's position in the market."

Sega refused to comment on the developments.