Sony Corp. slashed the price of its next-generation Playstation 3 game console late Sunday as it attempts to regain market share lost to rivals Microsoft and Nintendo.

Japan-based Sony cut the price the 60 gigabyte version of its PS3 by $100, or 16.7 percent to $499 from $599. The firm also introduced a new model featuring a larger 80-GB drive previously unavailable in the United States.

Sony says the new 80GB model will provide more storage space for downloading additional games and other entertainment content from the PlayStation Network.

The model seems to indicate a plan to offer a movie download service, according to analyst Todd Mitchell of Kaufman Brothers. Microsoft currently offers downloadable movies via Xbox Live. Sony is launching a similar service for the PS3 called Home, he explained.

The price drop was widely anticipated by industry analysts and fans but had been expected to be announced at this week's Electronic Entertainment Expo, in Los Angeles. Sony denied the rumors as recently as last week. However after an ad for Circuit City advertising the lower price was released early this past weekend, Sony confirmed the drops on Sunday.

The lower prices are expected to pressure Sony's rival, Microsoft.

Last week Microsoft announced its own update to its Xbox 360 console, increasing its storage to 120-GB in a new system dubbed Xbox 360 Elite.

We expect Microsoft to follow with a price cut of its own, with the Xbox 360 core model going from $299 to $249, the Xbox 360 premium model going from $399 to $349, and Xbox 360 Elite model going from $479 to $399, Wedbush Morgan analyst Michael Pachter told clients in a note Monday morning.

U.S. consumers have purchased 1.38 million PlayStation 3s since it was introduced in November. That compares with 2.84 million Nintendo Wii players. Microsoft sold 5.5 million units of the Xbox 360, introduced a year earlier, according to market research firm NPD Group Inc.