Stakes Ever Higher At Video Gaming's Premier Exposition

Pot Last Year Reached $7.3 Billion

LOS ANGELES -- Having grown the video game world into a multibillion-dollar industry, game console makers Sony Corp., Nintendo Co. and Microsoft Corp. showed off what's next on the eve of the Electronic Entertainment Expo trade show here.

This E3, as the convention starting today is known, marks one of the game industry's occasional hinge points, when vendors all announce new systems at once. So far this week, E3 attendees have seen the unveilings of a new Xbox, a new PlayStation and Nintendo's follow-up to its GameCube console.

Microsoft and Sony are gambling that consumers will want new systems that, like the upcoming Xbox 360 and PlayStation 3, will plug into high-definition televisions and tap high-speed Internet connections for online competition and interaction. Nintendo, on the other hand, is pitching its upcoming Revolution as a better version of today's game machines, not some new sort of digital hub.

With every generation of game systems, the stakes and the ambitions get higher for this growing industry. Last year, video and computer game software sales hit $7.3 billion, according to the NPD Group's research. But that's not enough: This new crop of machines marks a renewed effort by the three firms to reach beyond the demographic of game-addicted young men.

As Nintendo marketing vice president Reggie Fils-Aime said at a news conference yesterday, one goal of the Revolution console is to win fans among "groups that don't even call themselves gamers yet."

At a loud gathering Monday night, half news conference and half party, Microsoft said much the same thing.

"Don't get me wrong, we love that guy, the 18- to 34-year-old male, he's the backbone of our industry," said J Allard, a Microsoft vice president and architect of the new Xbox. But he said the new model would "bring everybody back into the living room."

For Microsoft and Nintendo, one way to do that is to revamp how people play against each other on the Internet. Today, many casual players shy away from online competition, for fear they'll get whipped by trash-talking, hard-core gamers. Both companies said they will set up new ways for players of different styles and abilities to meet online. For example, Microsoft said it wants to let people create new clothes or items for characters in games, then trade or sell them online.

These companies are also trying to come up with more titles that don't fit into the traditional notion of "video game." For example, a new release for the Nintendo Game Boy DS handheld called Electroplankton lets players create music while interacting with a psychedelic light show.

Sony has been the winner in this game console generation, with sales of about 74 million units of the PlayStation 2, according to P.J. McNealy, an analyst at American Technology Research. Microsoft and Nintendo took distant second and third places, with sales of 20 million Xboxes and 18 million GameCubes.

In the last go-round of the game console wars, Microsoft's Xbox and Nintendo's GameCube arrived after Sony's successful PlayStation 2 and never caught up. This time, Microsoft is moving first: It says the Xbox 360 will be in stores this holiday season. Sony's PlayStation 3 isn't due until next spring, and Nintendo won't provide a ship date for its Revolution more specific than "next year." None offered any details on pricing.

Though Nintendo is a venerable game industry presence -- this is the company that brought Mario to the world -- analysts expect the Sony-vs.-Microsoft competition to dominate the market.

If hardware specifications determine that, both companies already have an edge. The Japanese computer-electronics giant and the Redmond, Wash., software titan talked as if their new creations would each be the fastest on the planet. Fans awaiting the new consoles are speaking in terms of teraflops, or trillions of calculations per second. But such traditional measures of a game system's worth may not matter much now.

"I am skeptical that we are going to see content that even comes close to harnessing the power of either box for the next several years," said Michael Pachter, an analyst at Wedbush Morgan. "It's like using a 3.2 gigahertz PC or a 3.4 gigahertz PC for word processing -- it's not going to make much of a difference."

Nintendo, by contrast, refrained from talking too loudly about the Revolution's innards. It would not even say if it would provide high-definition video, a feature touted in both the Xbox 360 and PlayStation 3. One detail the Game Boy maker did provide: Revolution owners will be able to download titles from a back catalogue of games made for earlier Nintendo systems.

The quality of each system's games -- the most important factor in the long run -- can be difficult to determine at a show like E3, where only carefully prepped demonstration versions are on display.

Dan Hsu, editor of Electronic Gaming Monthly, said he thought that the games for the PlayStation 3 looked more impressive. But, he added, "those games could have been polished and optimized to look much better than what you will eventually be able to buy."

Pachter agreed. "I want to see the games side by side," he said. "I want to see Madden for the Xbox 360 next to Madden for the PlayStation 3."

Staff writer Jose Antonio Vargas contributed to this report.