Sega to cut Dreamcast price by 25 percent

The maker of video-game consoles says it will drop the price of the game system to $150 to boost sales before Sony introduces its PlayStation2 in the United States.

Sega, the No. 3 maker of video-game consoles, said it will drop the price of the Dreamcast game system 25 percent to $150 to boost sales before Sony introduces its PlayStation2 in the United States.

The price cut from $200, about a year after the device was first introduced in the United States, comes as Sega looks to accelerate sales by luring mainstream consumers who shop in stores such as Wal-Mart. Sega has sold 2.1 million units in the United States thus far and hopes to sell 2.9 million more by March 31, said Peter Moore, president of the company's U.S. unit.

Sega's price cut also comes about two months before Sony brings to the United States the highly anticipated PlayStation2 console, which will cost $300. Moore said Sega wants to lure price-sensitive customers while producing game software that appeals to hobbyists who have already bought the Dreamcast.

"What we're doing is playing both ends of the spectrum," Moore said. "To get to the next level, we've got to attract a more casual gamer. Price is a major tool to do that."

He also said Sega can appeal to retailers by providing a steady stream of shipments, while the PlayStation2 is likely to sell out quickly and be in short supply.

Dreamcast sales have slowed since last holiday season, when demand exceeded expectations.

The price drop is something of a departure from previous marketing plans that emphasized rebates and Sega's online service, SegaNet, which lets people log on through the modem-equipped Dreamcast and play games over the Internet.

Sega still plans to offer a $150 rebate to customers who agree to join SegaNet for 18 months at a cost of $22 a month. Many customers may first be exposed to the service and rebate offer through advertisements built into games such as "NFL 2K1," Moore said.

Sega will offer customers 50 hours of free play over the Internet. About 12 games that can be played over the Internet will be available by the end of the year, Moore said.

Sega will give a free keyboard to those who subscribe to SegaNet, though it will sell a computer mouse separately. The company hopes to sign up 500,000 subscribers by March 31.

Moore said "NFL 2K1" could top more than 1 million units sold, the first Dreamcast title to achieve that benchmark.

Copyright 2000, Bloomberg L.P. All rights reserved.

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