"What I heard late Friday and this morning is they were definitely going to $199," said Michael Wallace, an analyst at UBS Warburg who follows the industry, in a Reuters story.

The news comes on the heels of Microsoft’s recent decision to lower the price of the Xbox in Europe and Australia, with indications that the U.S. price will also be lowered to $199.

Earlier this week, Edward Williams, an analyst with industry consultant and investment bank Gerard Klauer Mattison, told GameSpyDaily that the Xbox cut would cause a ripple effect at Sony.

“It’s not a slam dunk for Sony to follow right away with a price cut. But they are also under growing pressure from retailers to follow Microsoft’s lead to $199.99,” Williams said.

The news of price cuts isn’t entirely surprising, however. But with both Microsoft and Nintendo also recently announcing strategies for online gameplay for their respective consoles, and all three companies seeking to make a big splash at next week’s Electronic Entertainment Expo, it seems that a console price war is in full effect.