Sony has ruled out cutting the price of the PlayStation 3, despite the console struggling badly against Nintendo’s rival Wii.

Ryoji Chubachi, the Sony president, said that there were "no immediate plans" for such a move, despite the PS3’s relatively high price — about £400 in the UK — being cited as one of its key disadvantages against the Wii, which retails for less than half that.

The latest industry figures suggest that the Wi is outselling the PS3 by two to one in the UK.

In Japan the ratio has been put as high as five to one.

Margins on the Sony console, the development of which ran late and well over budget, are a big problem for the electronics giant, and the machine is expected to be loss-making well into next year.

Selling consoles at a loss to stoke demand for higher-margin games software is a common tactic.

But pressures to keep the price of its next-generation Blu-ray DVD players buoyant may also be playing on Sony’s mind.

The incorporation of the initially problematic Blu-ray technology in the PS3 was one cause of the machine’s delay and lofted price.

Blu-ray has won greater backing in Hollywood than Toshiba’s rival HD DVD format partly because the PS3 was supposed to provide a wide base of players to further support demand for the format.

However, one top Hollywood executive told Times Online that while Blu-ray looks to be beating HD DVD in terms of sales, Sony’s reluctance to cut the price of players was beginning to worry studio executives.

“This looks like a replay of VHS versus DVD, right?" he said. "Sony lost that and needs to get this one right. By keeping player prices high, I’m not convinced they are.”

Although analysts suggest that Blu-ray has the early upper hand in terms of sales, neither rival format has achieved widespread adoption.

The latest industry figures suggest about 350,000 Blu-ray movies have been sold in Europe this year, a fraction of the overall market, despite sales asoaring 1,000 per cent after the launch of the PS3 in March.

Blu-ray leads HD DVD in Hollywood support, having won the exclusive backing of five studios: Sony, Walt Disney, Twentieth Century Fox, Lions Gate and MGM.

By contrast, only Universal has opted to back HD DVD exclusively.

Paramount and Warner Bros are making films available on both formats.

Across its business, Sony said that it expected to achieve its target of a 5 per cent operating margin this financial year.

Separately, Microsoft said last night that it would take a charge of more than $1 billion (£497 million) after admitting to selling faulty Xbox 360 games consoles.

The group is to expand its global Xbox 360 warranty to cover for the problem — identified by an error message of three flashing lights — to three years.

The confession will come as a blow to the US group, which is locked in a three-way console war with Nintendo and Sony.

Bill Gates, the Microsoft co-founder and chairman, regards the Xbox 360, which was launched in 2005, as the centrepiece of the group’s home entertainment strategy.

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