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The source of the story is an analyst at Lazard Capital Markets analyst Colin Sebastian, who believes the retail price may be reduced by 13.4 per cent, reports Reuters.

'Our industry checks indicate that Sony is planning to cut the PS2 price to $129 from the current $149 before the end of this month,' Sebastian commented in a note to clients.

Such a reduction would not be unexpected following the delayed release of the PlayStation 3 until November. For large

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numbers of punters to part with cash for an older generation console with the new one already on the horizon will require some prompting.

As Sebastian observes: 'Hardware price cuts are necessary not only to drive demand at the end of a console cycle, but also to bring the current-generation consoles within reach of more value-oriented customers.'

The PS3 was expected to hit the shops sometime this spring, but has been held back, with Sony having to wait for agreement on the final specification for the Blu-ray optical disc drives that the console will use. Details of pricing, and final specifications, have still yet to emerge, however.

The analyst's comments follow those of Wedbush Morgan Securities analyst Michael Pachter, earlier in the week that the games industry, was facing a long-term squeeze.

Pachter predicts that US game sales for March will have been 18 per cent below the same period a year ago, reports GameSpot, noting the seventh consecutive monthly decline. It attributes this to slowing software sales for current-generation systems not being matched by those for next-gen platforms, such as the Nintendo Dual Screen and Sony PlayStation Portable.