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PlayStation 2 holds ground vs new rivals

SAN FRANCISCO (Reuters Life!) - For all the buzz in the video game industry about high-definition and motion-sensing, you might never guess that one of the best-selling consoles uses decidedly old-school technology.

Sony Corp.'s 6758.T 7-year-old PlayStation 2 is turning out to be an overachiever in the industry, quietly racking up impressive sales figures while sate-of-the-art machines from Sony, Microsoft Corp. MSFT.O and Nintendo Co. Ltd. 7974.OS grab the headlines.

The PlayStation 2’s comparatively low price of $130 and a games library of some 2,000 titles, including favorites such as “Metal Gear”, “Final Fantasy” and “God of War,” has given the sleek black machine a surprisingly long life.

Sony sold almost 300,000 PlayStation 2s in the United States in January, behind only Nintendo’s Wii which boasts a motion-sensing controller and sold 436,000 units.

It beat Microsoft’s Xbox 360 (294,000 units) as well as Sony’s own PlayStation 3 (244,000 units), according to data from market research firm NPD.

“It shows that it’s still a good value proposition with plenty of software,” said PJ McNealy, an analyst with American Technology Research. “It’s continued success has not only been a surprise to Sony but to other hardware makers as well.”

Sales are so strong that Sony says it hasn’t been able to keep up with demand.

“It’s this industry’s best-kept secret,” Jack Tretton, chief executive of Sony Computer Entertainment America, told Reuters in an interview. “And it’s a multi-billion secret.”

PS2 KEEPS UP WITH NEWCOMERS

Sony’s continued support for its older technology contrasts with Microsoft, which stopped making the original Xbox and put all of its eggs into the next-gen basket with the 360. Nintendo is still cranking out its older console even as it rides high on the Wii’s popularity.

“We are continuing to manufacture and sell Nintendo GameCube, which is an ideal entry-level value system and has a strong library of games,” spokeswoman Beth Llewelyn said in an e-mail. “Nintendo GameCube still enjoys solid third-party support.”

Microsoft was not immediately available for comment.

The PS2 has provided Sony with a steady stream of cash at a time when the Japanese electronics giant is losing money on the PlayStation 3, which is packed with costly features such as a high-definition Blu-Ray DVD player and hard-disk drive.

Sony’s Tretton said the PS2 could stick around well beyond its planned 10-year life cycle, and the company expects to sell between 4 and 6 million units in the United States this year.

Demand for PlayStation 2 games is so strong that it still makes sense for Sony and other developers to make new games.

The PS2 boasted two of the top 10 selling titles in January, and next week Sony will launch “God of War II”, a $50 action game that has already shipped 1.1 million copies.

“It far and away beats the other last-gen systems,” said Jeremy Dunham, PlayStation editor at entertainment Web site IGN. “Brand loyalty is very important.”

But could the PS2 be cannibalizing business that should be going to the PlayStation 3, Sony’s flagship consumer device?

“Some who spends $129 on the PS2 isn’t going to the store to drop $600 on the PS3,” said McNealy of American Technology, adding: “It’s a bit of a catch-22 for them right now. You want to give a reason for people to migrate to the PS3.”

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