Sega extends price war with Sony

Sega is hoping to close the gap on its arch-rival Sony in the cut-throat computer games market by continuing a price-cutting war it claims has seen sales of its Sega Saturn consoles double in the last few weeks.

Sega cut the price of the Saturn by pounds 50 to pounds 249 at the beginning of this month, saying the promotion would last three weeks. However, the success of the campaign is tempting the company to continue the discount for as long as it takes to wrest the initiative from Sony's PlayStation, which is continuing to outsell the Saturn, according to new figures released yesterday. Sega declined to confirm the decision yesterday.

The PlayStation is priced at pounds 295 and Sony says it has no plans to cut the price. "It is not necessary, given the current level of demand." However, Sony may be forced to reduce its prices if it finds that Sega is clawing back market share.

Another possibility is that it will choose to give away free games with the consoles rather than cut the price. Both companies were coy on new initiatives but are expected to announce plans at the European Computer Trade show which starts at London's Olympia on Sunday. The tit-for-tat sniping is part of an increasingly bitter battle that has seen both companies engage in a marketing frenzy.

The stakes are huge in the computer games market, which is worth around pounds 2bn a year world-wide. Figures released yesterday by Sony claim that its PlayStation console has sold more than 3.7 million units world-wide compared with Sega Saturn's figure of 3.5m.

European sales have topped 700,000 since its launch in September last year including 200,000 in the UK. Sony claims world-wide revenues for the PlayStation have passed $2bn and that it is a more successful launch than the Sony Walkman.

Sony had already claimed victory in the Christmas battle when it said it had sold 35,000 units in December against Saturn's 25,000. Sega had been spending less on promoting its new launch while Sony had earmarked pounds 20m to push the PlayStation. Both companies tend to dispute each other's figures as a matter of course.

The fierce battle for the hearts and pocket money of the nation's youth is threatening to leave Nintendo far behind.

The company insists its long-delayed Nintendo 64 console, which operates on 64-bit technology, will be launched in the late autumn, denying suggestions that its debut has been put back until next year. A price point has yet to be decided.

Nintendo has enjoyed much success with its Gameboy machine but instead of joining Sega and Sony with new 32-bit machines which are more powerful, it has chosen to wait and try to leapfrog rivals with its 64-bit machine.

Sega is set to announce that it has first publication rights to Virgin's Heart of Darkness, an interactive cartoon-based game. Sony will not have rights to publish the game on in Playstation unit next year.