Grey stage set for UK PS2 price war

Unofficial discounting force Sony's hand?

A significant unofficial drop in PlayStation 2 hardware and software prices has kicked off in the UK fuelled by the Caldwell Group-backed distributor 20:20, which is causing consternation within Sony after it recently began offering "grey" PS2 imports to retailers, along with the option of several software bundles.

20:20 bullishly entered the games market late last year, owned by the Caudwell Group, the same independently-owned company behind the Phones4U mobile phone retail chain. It recently began importing PS2 consoles from within Europe, replacing the leads with "genuine" UK-compatible ones and selling the systems to small retailers for £99 ex VAT.

That significantly undercuts the official trade price offered by Sony's main distributor, Centresoft. The deal looks even more attractive as 20:20 is also offering to bundle up to five games with each console at a price of only £10 each - meaning that the trade price for the console and five games comes to only £150.

The games offered to retailers in the deal are The Getaway, GT3, Hitman 2, Star Wars: Starfighter, Starsky & Hutch and Space Invaders, and 20:20 is also offering a range of other recent software (including many of EA's Christmas releases, Sonic Heroes and Mafia, to name but a few) at less than the official trade price offered through the UK distribution channel.

Sony has reacted quickly to the threat of seeing its official channel being undercut, and has sent a letter to retailers this week warning them that grey imported PS2 consoles have been "modified and repackaged without Sony's notification, authorisation or approval."

According to Sony's lawyers, the repackaged European models feature third-party leads which the company cannot vouch for the safety of, and the firm has "little doubt that the retail sale of these modified products will mislead consumers into thinking they are buying approved Sony products."

Distributor 20:20 responded to Sony's letter with a letter of its own, which was published in the UK games retail newsletter MCV this week. "20:20 believes it has not acted unlawfully and it is common practise to sell products internationally," it stated. "20:20 will continue to do this as long as there is a price advantage that it can pass on to our customers without compromising safety, quality and legal practice."

The whole affair will be familiar to industry watchers who can cast their minds back five years to 1999 - when major supermarket retailer Tesco did exactly the same thing with PlayStation stocks, importing them from Europe and selling them at a discount of up to £15.

At the time, Sony acted quickly to prevent a price war from kicking off; however, with the continuing deregulation of European markets, this may not be an option now. While the prospect of a price war on PS2 goods will delight consumers, such retailer bunfights are traditionally very damaging for the industry as a whole. Could Sony perhaps nip this one at the bud with an official price cut for the PS2?

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