The PS4 could retail for as little as US$349 (about AU$360, £230) and the Xbox One for US$399 (about AU$410, £260), according to analyst Michael Pachter of investment firm Wedbush Securities.

In a pre-E3 note to investors, Pachter said that the two upcoming consoles will launch with significantly cheaper prices than their predecessors. He puts the low cost down to cheaper build materials, which he estimates at around US$275 (about AU$285, £180) and US$325 (about AU$335, £210) for the PS4 and Xbox One respectively.

Pachter is confident that alternative pricing models and extra services could also bring down the upfront costs. Speaking to investors, he said: "We believe the ability to watch live TV from a cable, telco, or satellite set-top box through Xbox One could entice an MSO [multiple system operator, or cable company] to drive subscriptions through a subsidised box in exchange for a multi-year contract."

Gaming subsidy

Internet providers could have an incentive to pitch in too, according to Pachter: "The 'always connected' requirement for the Xbox One likely means that a broadband connection will be required, suggesting to us that ISPs may have an incentive to offer a subsidy as well."

He continued: "In addition, Microsoft could conceivably subsidise the Xbox One through prepaid Xbox Live Gold subscriptions (as it has done on a limited basis in the past) or premium Skype functionality as well. Similarly, Sony could subsidise the PS4 through prepaid PlayStation Network subscriptions, but unlike Microsoft, it does not have a history of doing so."

Pachter's comments contradict the estimate put forward by Amazon.co.uk, which put a pre-order price tag of £599 (about AU$940, US$920) on both consoles.

Via GamesIndustry.biz