Sony confirmed on Tuesday that it will be dropping the price on its PlayStation 3 console.

Available September 1, a slimmer version of the PS3 will hit retail for $299. Sony will also drop the prices of the current 80GB and 160GB models to $299 and $399 respectively.

The PS3 Slim will have a 120 gig hard drive, it will be 33 percent smaller, and 36 percent lighter than the previous model.

When you get to $299 and combine the PS3's state of the art gaming, free online, hard drive and Blu-ray player, we think it's a game-changing move that will fuel tremendous momentum for us, said Peter Dille, senior vice president for marketing at Sony Computer Entertainment America.

The PlayStation 3 has struggled recently the $250 Nintendo Wii and the Xbox 360, which sells for $200 for the cheapest model. Last month, Sony sold just 121,000 PS3s in the United States, about half compared to its rivals.

The PS3 Slim is up for pre-order on Kmart.