Konami sees little PS3 price cut impact

LOS ANGELES Tue Jul 10, 2007 3:17am EDT

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LOS ANGELES (Reuters) - Sony Corp.'s (6758.T) $100 price cut for the PlayStation 3 is not enough to turn the fortunes of the game console, which has suffered a slow start, an executive of game software maker Konami Corp. (9766.T) said.

Sony cut the PS3 price to $500 in the United States on Monday, in a bid to ignite demand. But it still costs twice that of Nintendo Co. Ltd.'s 7974.OS Wii console, whose $250 price and motion-sensing controller have made it a best-seller despite its lack of cutting-edge graphics.

"I wonder if Sony can win back user support by the price cut of just $100," Kazumi Kitaue, the head of Konami's North American and European operations, told Reuters in an interview ahead of this week's E3 video game industry trade show.

"I don't expect a substantial impact ... With $500, you can buy a personal computer."

Sony has packed its cutting-edge technology including a Blu-ray high-definition DVD player and high-performance chips in the PS3. The advanced functions enable life-like graphics, but have driven up production costs.

Its high price and a lack of attractive software have been cited as major reasons for the PS3's plight.

Kitaue said Konami may need to expand the target hardware for its blockbuster fighting game Metal Gear Solid, which has so far been developed for Sony's PlayStation machines, to other consoles in the future to recoup development costs.

"Since Metal Gear Solid was born for the PlayStation, we would like to keep it a PlayStation game. But we might have to take some steps," Kitaue said.

Konami plans to launch Metal Gear Solid 4: Guns of the Patriots for the PS3 in the current business year to March 2008.

HARD-CORE GAMERS

The release of the latest version of Metal Gear Solid series is expected to help lure hard-core gamers to the PS3 and alleviate concerns over scarcity of strong PS3 titles.

Underscoring sluggish PS3 sales and robust demand for the Wii, Nintendo shot past Sony in market value last month and bumped the Tokyo-based electronics conglomerate off the list of Japan's 10 most valuable companies.

Kitaue also said operating profit at Konami's game division is likely to grow in the next business year starting April 2008, following an estimated 5 percent growth for the current year, as the user base for new consoles -- Microsoft Corp (MSFT.O) Xbox 360 as well as the Wii and PS3 -- expands.

"Next year is still a growth period. I think we will grow, and so will the industry," he said.

Konami, which competes neck and neck with No.1 video game publisher Electronic Arts Inc. ERTS.O in Europe's soccer game market, has the potential to double its soccer software sales in the United States, gaining on EA, Kitaue said.

"Our soccer game sales in the United States total a little fewer than 500,000 units. If we combine ours with EA's, that's going to be 2 to 3 million units. I believe, with proper preparation, we can bring our number to 1 million," he said.

Following Kitaue's comments, shares in Sony closed down 1.1 percent at 6,460 yen on Tuesday in Tokyo, while Konami, known for such games as Dance Dance Revolution and Pro Evolution Soccer, gained 0.9 percent to 2,940 yen.

The benchmark Nikkei average .N225 was virtually unchanged.

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