The war of the consoles has begun, with Sega Dreamcast distributor OziSoft announcing the price of the console will be slashed to $299 as the battle with Sony's much-awaited PlayStation 2 heats up.
But retailers are likely to be the big casualties of this price war, as margins are slashed to garner the largest market share.
The Dreamcast recommended retail price is being reduced by nearly $200 in an effort by the distributor to establish market share before Sony releases PlayStation 2 in Australia in October.
"We are aiming to get to the mass market as quickly as possible," said OziSoft sales director Danny Gambaro. "It is still the most powerful machine on the market and graphically superior."
The console has been on the market since late last year, and while initial sales had been sluggish due to supply problems and uncertainty over the GST, Gambaro said sales since June had increased significantly.
"The $499 price tag was a bit of an issue, but as soon as the GST came in there was a significant increase in sales; the retail market was affected drastically," he said.
Although the move is likely to further increase sales figures, retailer margins on the system will be almost non-existent, with most money being made on games.
"Retailers are not really making margins on consoles - traditionally they don't make money on hardware. The focus market is really on peripherals and software," Gambaro said. "People really want Dreamcast to succeed and they realise that involves a couple of sacrifices."
To compensate, OziSoft will release 15 new software titles in September and around 40 titles by Christmas, bringing the games count to well over 100 all told. The company released Sydney 2000 - touted as "the official video game of the Olympic Games" this week. The game is available on PC and PlayStation, as well as the Dreamcast format. Gamers will also be able to play Dreamcast games online with the launch of Chu Chu Rocket next month. The console is capable of generating more than 3 million polygons per second for high-resolution game-play and uses 64 channels for sound.
Dreamcast also comes with an Internet access disk - following a deal between the distributor and Telstra - which gives buyers 150 hours free access instantly.
"We see the Dreamcast as the future of consoles because we are looking at the gaming side of things. We are not really focusing on entertainment, which is where Sony is going. Around 80 per cent of games will be online with releases such as Quake 3 very strongly anticipated."