Sony is cutting the price of its PlayStation 3 gaming console by $50, in a move designed to drum up more demand for the 5-year old console as competitors like Nintendo slashed their prices.

On Tuesday, Sony said it would slash the current PlayStation 3 price of $299 to $249, marking it down 17 percent. Analysts have been expecting the price cut since the console is already five years old. The last time Sony cut the price of the PS3 was back in 2009 when it launched the slimmer model of the console.

The price cut comes in the face of stiffer competition from rivals. Nintendo announced a month ago that it would cut the price of its flagship Nintendo 3DS player. Microsoft's Xbox 360 has generated interest with the addition of the Kinect controller which allows users to play games without the need for a game controller.

Microsoft has sold 55 million Xbox 360 units worldwide; Sony has sold 52 million units of the PS3 while Nintendo remains ahead with 86 million units sold of its gaming console.

Jack Tretton, Sony Computer Entertainment of America CEO, said the reduced price will give the Sony PlayStation 3 a boost and will help the company meet its goal of selling 15 million consoles this year.

"It is no secret that the PlayStation 3 has been struggling for some time against the Microsoft Xbox 360 in North America," though it did slightly better in Europe, said Jesse Divnich, an analyst at Electronic Entertainment Design and Research.

Divnich believes Microsoft won't immediately follow with a price cut of its own.

Despite the price cut, Sony will still be able to sell the console for a profit because of manufacturing efficiencies. Tretton said that Sony is cutting the price in August to target the back-to-school shoppers.

"Ultimately, what will carry the day for us is the library of games we have," he said.