WITH SALES of video games down 17 per cent on last year, the movers and shakers of the industry have descended on the E3 Expo in Los Angeles this week, hoping to revive their belief that it is a recession-free business.
There is a buzz around the annual trade show that has been missing from recent years, with 40,000 visitors expected compared to 5,000 at the scaled down 2008 event.
Giant TV screens show off games that the industry hopes will deliver a good Christmas, the crucial selling period when nearly 50 per cent of annual revenues are made. The sector has never been in any serious danger of a slump but there was a mild confidence crisis that E3 is keen to address.
Activision chief executive officer Bobby Kotick set the tone in a pre-event briefing when he said the global video game industry would grow from $39 billion (€27.3 billion) in 2008 to $55 billion (€38.5 billion) in 2012.
The mood of optimism was helped by the console manufacturers, each making significant announcements over the first two days of the event.
Microsoft kicked it all off with a star-studded presentation that featured two bemused Beatles and film director Steven Spielberg.
When it got down to business Microsoft unveiled “Project Natal”, a planned upgrade to its Xbox 360 console that replaces the traditional controller with a camera, a depth sensor and microphone.
Spielberg was there to endorse the system which uses movement and voice to control game play, turning the console into a Wii-style device but taking the concept much further and doing away with a controller. “This is not a case of reinventing the wheel, but removing the wheel entirely,” said Spielberg.
The Nintendo Wii revolutionised the market when it launched in 2006, using motion-sensitive controllers to manipulate game play. With 50 million sales, it is the number one console by a distance.
Xbox 360 has sold 28 million, a figure Microsoft will be hoping to grow with a revamped version that could capture some of the casual gaming market that Nintendo has won over with the Wii and its DS handheld. Several games were demonstrated and development kits have been sent to publishers but there was no launch date or price given.
Xbox Live, the console’s online community which has 20 million users worldwide, reinforced its claim to be the “largest social network on the planet” with new connections to Facebook and Twitter. And following on from last week’s announcement that Sky TV content is coming to the console, Microsoft has also struck a deal with Last FM to use its streaming radio service.
As part of a preview for the upcoming Xbox 360 games, Paul McCartney and Ringo Starr made their brief appearance to endorse The Beatles: Rock Band, a new interactive music title scheduled for a September launch that features their original songs and simulated versions of the Fab Four.
“Whoever thought we’d end up androids,” quipped Paul. “I love the way I walk!” said Ringo.
Nintendo is expected to announce new Wii games that will revive some long-standing characters that are synonymous with the Japanese brand, such as Mario, the fat Italian plumber who has been entertaining players for more than two decades across various Nintendo platforms.
Sony has sold just over 20 million PS3s but its main focus at E3 is a new version of the PlayStation Portable. PSP Go is smaller and lighter and abandons its proprietary UMD optical disc format for Sony’s Memory Stick storage and games that are downloaded directly on to the device.
The growing importance of the internet as a delivery channel has also been highlighted by Electronic Arts with Tiger Woods PGA Tour Online, a PC game that is streamed over the web to subscribers. The "no packaging, no disc" proposition has obvious appeal for publishers looking to cut costs but will surely strain relations with the traditional retail channel which has served them so well.
Like the music business, the games industry may have to negotiate a difficult transition to harness the full power of the internet age.
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