David Prosser: Game over for Sony

Outlook Don't bet the ranch on Sony pulling off a Christmas coup by cutting the price of its PlayStation 3 games console (a new, slimline model is to be priced at £249.99, down from £299.99). Nintendo's Wii has stolen a march not because the console is cheaper – though it is, and will still be even after the price cuts announced this week – but because it has changed the market.

For the most part, Sony's console is for gaming aficionados, mostly youngish blokes. The Wii, by contrast, is designed for family entertainment. It's the first computer games machine that mum and dad have played with on a regular basis, too. And that's why Nintendo sold twice as many units as Sony last month.

The PS3 has always been based on a dud business model. Even at the current high prices, Sony loses money on every console it sells – the idea is to recoup the losses through sales of expensive games. That strategy has not worked: Sony's gaming business has lost $4.3bn over the past three years.

And now, with total sales of the PS3 coming in at around 24 million – compared with 53 million for the Wii – game designers are beginning to question Sony's strategy, threatening the licence fees they pay the company.