Business Week spoke with Nikko Citigroup analyst Kota Ezawa who believes changes in the PlayStation 3 have dropped production costs from $800 to about $400 per unit. Although Sony may have cut production costs dramatically it's not all sunshine and lollipops, Ezawa expects the Sony games division to lose about $1.4 billion this fiscal year, which is still better than the $2.1 billion loss last year and he doesn't expect prosperity in the division until '09.

With production costs continuing to drop and signs that Sony may see Blu-ray succeed, consumers who held out on the PS3 may see benefits this year. If the cadre of American analysts is correct, there may be another PS3 price drop this year -- although this time it'll appear more a sign of growth than desperation.

[Via PS3 Fanboy]

The word you're looking for is: FINALLY. Sony America finally gets their damn head in the game to sell some PS3s with a new ad campaign for this holiday. Sony Senior VP of Marketing and PSN Peter Dille wrote a long love letter on Sony's blog about the plan with this holiday's marketing. "Last year, we launched the PS3 with a campaign that become known as the 'White Room' and we received a strong reaction to those ads for being provocative and demonstrating the PS3's power," Dille wrote, obviously unaware of the extreme delusion in that statement. "With those technology messages now firmly embedded, we wanted to move beyond the 'power' message with a more high-energy, entertainment driven focus for the PS3. The games are here, the price point is now $399 and we wanted to make the news loud and clear."

The 30 second spot (above) focuses on the exclusive games for the console. And in a shocker for Sony, they actually show the games in the ads. After the break is the 60 second spot focusing on the PS3's features. Now we wait to see if new consumers notice the lack of backwards compatibility in their new $399 PS3.

MCV reports European tracking firm Chart Track informed them that the PS3 has seen a 178% increase in sales recently. They reached this conclusion calculating the "week-on-week PS3 hardware sales" following the introduction of the 60GB bundle and the new 40GB unit. It sounds like some fancy math is going on there, but we'll take any good news on the PS3 at this point.

Chart Track says the introduction of the 40GB PS3 created the third largest hardware sales week for the system behind the console's first two weeks on sale. Software sales also increased as Resistance: Fall of Man jumped the charts from #22 to #8. Heavenly Sword and Motorstorm also saw increases. It appears Sony is finally getting the PS3 into a price range consumers are comfortable with.

With all the 60GB PlayStation 3s out of the warehouse and finding homes, it's time for the analysts to say that the 80GB PS3 will drop to $499 (duh) -- this year (wha?). Both Wedbush Morgan analyst Michael Pachter and -- please sense the Alan Rickman octave change -- simExchange analyst Jesse Divnich, believe there will be a price cut for the 80GB model before Jesus' birthday.

The analysts go on to say what you can probably just guess. Unless Sony wants to eat a huge helping of "we are total jerks," they'll have to drop the 80GB price to remove the clearance sale tag their 60GB model has been stuck with since the PR nightmare during E3 week when they announced the price drop and followed it up on Friday by announcing a discontinuation of the 60GB model. It's all about the timing now. When will the 60GBs be gone? Who's buying them with this second price drop ready to pop out? We know it has to happen for the sake of PR.

We just felt Europe's pain. Sony has announced that they will not be cutting the price of the European PlayStation 3 and they will not be offering the 80GB PS3 at this time either. To compensate, Sony will offer a "starter pack" at the respective countries current price. For example, in England, the £425 PS3 will allegedly have an extra £115 of content included as well. No word yet on what that will be.

So, um, yeah. There's speculation of a second price cut in the States before the end of the year and Europe just can't get any love. Hey, at least for this they've got universal healthcare, good cheese, cheap wine ... we're just trying to find the silver lining in this. Sorry.

[Thanks GiantHaystax]

An "employee of Circuit City" dropped this clip in our tip box about an alleged sale for the PlayStation 3. The flyer shows that Circuit City is dropping the price of the PS3 by $100 for the week of July 15. We contacted Sony to ask how they felt about the price drop and they told us, "Circuit City hasn't announced any price drop on PS3, so we have no comment." To be clear, despite the collective game consciousness' longing for a PS3 price drop and its possible announcement at next week's Min-E3 ... this is merely a clip of an alleged flyer which shows a week long sale at Circuit City for the PlayStation 3.

Now, if somebody happened to get their hands on the whole flyer, we'd have something to go back to Sony with. Don't get us wrong, this plot is thick like cheddar soup. Have we seen the price drop of a console, or even a sale, without it being officially sanctioned by the console manufacturer? Nope. Can we verify the validity of this flyer? Nope. Could Circuit City be desperate enough to sell the PS3 console at a loss to themselves just to move product and software? Well, that's the real question, isn't it?

Update: GameDaily reports an anonymous source who is the "merchandising manager at one of the world's biggest retailers" confirmed the price drop is retail-wide and begins July 12. The first wave of flyers are July 15. There's also an ongoing thread regarding the price drop at Cheap Ass Gamer.

Update 2: We now have the full page Circuit City ad found after the break. The tipster goes on to say, "And just to make things clear. This is not just for Circuit City. This will be for all retailers in the US and will be $499 from now on. No store can sell a console for cheaper without the permission from the console's company so no Sony did NOT give Circuit City a special deal to sale the PS3 at this price." [Thanks Se7enwolf]

It looks like the madness we've known as the PlayStation 3's price point will soon become slightly more reasonable as Sir Howard Stringer, the über-boss chief executive of Sony Corp., told the Financial Times they are looking to "refine" the PS3's price. In the megaton interview, Stringer says that Nintendo has a "very good business model" and sees the Wii and PS3 are "complementary and supplementary" consoles.

According to the Financial Times, Sony stands to lose $488 million in their games division this fiscal year as sales have been "lackluster" due to the price point and selection of software. Stringer says that the software situation should begin resolving itself by the end of the year and says, "That [price cuts] is what we are studying at the moment. That's what we are trying to refine."

Analysts have talked about the PS3 price drop being around the $100 mark, which would make it the same price as the now deceased 20GB model of the system. But, for all we know Sony could shock us all and make the PlayStation 3 the same price as the Xbox 360 -- causing all manner of hell to break loose. And who would be the winner? The consumer, of course.

[Via GameDaily.biz]

There's an alarming epidemic facing high school graduates in this country. No, we're not talking about literacy or obesity or anything so unimportant. We're talking about video games. Get your priorities straight, people!

According to a shocking report in the Dayton Daily News, the graduating class of 2007 is being distracted from important game-playing time by attention-stealing activities like "homework, jobs and extracurricular activities." That's right ... the promise of our future would rather do their homework than put in the important gaming time that will help them grow into mature and active adult gamers.

What's worse, some of today's graduating seniors have a hard time envisioning a future that included normative social gaming. "If some guy was like 'You want to go on a date? We could play Guitar Hero,' and I'm 30, I'd be, like, 'No!,' " said one such lost youth. It's enough to make you long for the good old days when students knew how important a Pac-Man high score was to their future.

[Via Gaming Today]

So, you want to buy the PSP, only have $220 and you're a big fan of Lords of Dogtown. Well, you're in luck! The PSP Entertainment Pack, which includes the UMD skate film, a 1 GB memory stick and ATV Offroad Fury: Blazin' Trails, has received the same $30 price cut as its little brother, the $169.99 Core Pack.

But let's say that you want to buy the PSP, but you live in Europe. In that case, Sony has told GamesIndustry.biz that you're out of luck, as there's no European price cut at the moment.

Yikes, Europe. Sony's retaliation for this little stunt was pretty swift and terrible, huh? This seems a little harsh, did you do something else to upset them? Just remember this lesson: If you buy a PS3, you get a free TV and a taxi ride home. If those 100 dudes are the only ones to buy it though, you keep paying €150/£100 for your PSP.

[Via Engadget]