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The new PlayStation 3 is two-thirds the size and weight of the original console. ((Sony))

Sony is looking to get back in the game with a cheaper, slimmed-down PlayStation 3 console to be released on Sept. 1.

The new model will feature a 120-gigabyte hard drive and a price tag of $299. Sony said the internal architecture of the console, from its microprocessors to cooling mechanism and power supply, has been completely redesigned so that it is now two-thirds the weight and size of the original.

Power consumption has also been cut to two-thirds, so the console will run quieter, Sony said.

The company's current 80GB and 160GB consoles are also seeing an immediate $100 price cut, to $299 and $399 respectively. Both models, however, are being discontinued and will no longer be available once stocks run out, according to PlayStation Canada marketing director Matt Levitan.

Sony has been planning the redesign for close to two years, which followed a strategy it set with the PlayStation 1 and 2 consoles. Both of those consoles were redesigned halfway through their life cycles.

"Strategy kind of coincided with the recession. It wasn't a knee-jerk reaction to the economy or anything our competitors were doing," Levitan said. "It was common practice for us to take a look at the PS3 and see if we could do the same."

Sony also announced a software update for all PS3 consoles, to take place on Sept. 1. The update will include a "what's new" screen as well as better shortcuts to content on the console. 

Despite more than 24 million units sold worldwide — about 1 million in Canada — Sony's PlayStation 3 is bringing up the rear in the latest round of the video-game console war. Nintendo's Wii has dominated with more than 50 million units sold, with Microsoft's Xbox 360 taking second place with more than 30 million.

Sony's console is also the only one with a built-in Blu-ray DVD player. With the new price drop, the PS3 is cheaper than many stand-alone Blu-ray players on the market.

Levitan said Sony is not necessarily disappointed with how the PS3 has done, particularly in Canada. The company has sold a million PS3 consoles here since its release three years ago, which mirrors the performance of the PS2.

"We had the most technologically advanced console but it did come with a higher price point," Levitan said. "It really depends on how you skin a cat, but … we actually do represent a greater percentage of revenue to retailers than Microsoft does."

All three console makers, as well as various third-party game publishers, have been hit by the recession. Sales of consoles, games and accessories have tumbled in recent months compared with last year. The games industry is already gearing up for the Christmas shopping season, where they see most of their sales.