MICROSOFT has cut the price of its Xbox 360 consoles in the lead up to Christmas, making the average unit the same price as the Nintendo Wii.
Standard Xbox 360 consoles will now sell for $399. The cut-price Arcade unit, which lacks a hard drive, will cost $299 and the high-end Elite model $549.
PlayStation 3 consoles cost $699, but come with a Blu-ray disc drive. The Nintendo Wii, viewed as a cheaper and more family-friendly alternative to the other consoles, sells for $399.
Competition between Microsoft and Sony in the gaming market is fierce this year as the two companies vie for second place behind Nintendo in sales.
Several big-name titles released during the holiday season will be exclusive to either the Xbox 360 or PlayStation 3.
Xbox 360 gamers will have Fable II and Left 4 Dead, made by Valve, the developer behind the critically-acclaimed Half-Life series.
On PlayStation 3 will be the innovative LittleBigPlanet and Resistance 2, the sequel to the console's popular launch title.
With the Xbox 360 now selling for at least $300 less than the PlayStation 3, Sony will be hoping consumers turn to its console for the built-in Blu-ray player.
Microsoft had previously backed the rival next-generation technology HD-DVD, which was abandoned in February.
Nintendo has led both Sony and Microsoft in sales of its Wii console, which became popular with families and casual gamers due to its innovative motion-control system and lifestyle titles like Wii Fit.