A price war has erupted between the heavyweights of the gaming console business.
Just hours after Microsoft Corp.'s Monday announcement that it would hang a $499 price tag on its first Xbox in eight years, Sony Corp. undercut its rival by $100.
The moves signal a dogfight for the year-end holiday season as both companies roll out their next-generation consoles: Microsoft's Xbox One and Sony's PlayStation 4.
Sony said it's latest PlayStation model would go on sale in the United States in November.
Sony also drew cheers from the audience at the Electronic Entertainment Expo (E3) in Los Angeles when it said the PS4 would run secondhand games and did not require an always-on Internet connection.
Earlier in the day, Microsoft had elicited groans from gamers when it announced restrictions on used games for the Xbox One and said players had to log onto the Internet for authentication.
"The PlayStation 4 won't impose any new restrictions on used games," said Jack Tretton, president and CEO of Sony Computer Entertainment America as the audience whistled and applauded.
Microsoft and Sony hope the consoles will attract new fans and retain users who are increasingly playing games on smartphones and other mobile devices, gradually diminishing the $66 billion video game business. Both companies are also offering more entertainment options.
The Xbox 360 is currently the best-selling gaming console in the United States, but global sales are almost on par with the PlayStation 3.
The new Xbox and PlayStation are both pricier than the $300 Wii U which Nintendo Co Ltd launched late last year but which has sold poorly, partly due to a dearth of new gaming titles. Nintendo is expected to announce new games for the device at the E3 on Tuesday.
Sony did not give details about original programming content for the PS4 but said new game titles would include Assassin's Creed IV Black Flag by Ubisoft and Kingdom Hearts III by Disney Interactive Studios and Square Enix Holdings Co Ltd.
"It's a very compelling price . . . given the entertainment PS4 will provide to gamers," Sony Computer Entertainment President and CEO Andrew House told the E3 event.
The Xbox One is costlier than the current Xbox 360 and includes a Kinect motion sensor for hands-free game playing.
Microsoft also announced several exclusive game titles, including a rendition of 'Minecraft' and a new installment in the popular 'Halo' franchise, which will be released in 2014.
The device will go on sale in 21 countries, including Britain, before the year-end holidays, the company said. Yusuf Mehdi, an executive at Microsoft's interactive entertainment unit, did not set any sales targets for the new Xbox.