NEW YORK (CNN/Money) - Microsoft Corp. slashed prices for its Xbox video game console Wednesday, just two days after rival Sony Corp. cut prices for its latest entry in the market, the PlayStation 2.

Microsoft (MSFT: Research, Estimates) said in a statement it was cutting the U.S. price for the Xbox machine to about $200 from $300.

Sony's (SNE: Research, Estimates) price cut -- also to about $200 from $300 in the United States -- stole the limelight when it was announced late Monday in Japan.

Traditionally, game makers have saved big announcements for the Electronic Entertainment Expo (E3), the industry's annual trade show that starts next week in Los Angeles. But the $6 billion video game market has gotten much more competitive in the last six months with Microsoft's entry into the business.

Nintendo told CNN/Money on Monday it had no plans to cut the price of its Gamecube console, declining -- for now at least -- to join the price war.

Microsoft also said it was cutting Xbox prices in Canada and Japan. It said in its statement that "recent momentum" in Europe and Australia demonstrate strong demand for Xbox.

But Sony's PlayStation 2 game player holds a 10-to-1 advantage over Microsoft's Xbox. PlayStation 2 has been on the market about a year longer than its competitors. As such, most analysts expected Sony to cut prices for the console.

Microsoft shares rose $2.19 to $54.88 Tuesday, while Sony's American depositary receipts were 60 cents higher at $55.60.