Holiday titles, price cuts in focus at game show

TOKYO/LOS ANGELES (Reuters) - As top video game makers gather next week in Los Angeles for the E3 trade show, they will be touting hot titles, new online offerings and, potentially, console price cuts to drum up gamers' support.

The mood on the event floor is expected to be festive, with the game business having thus far weathered sluggish consumer spending and soaring oil prices -- in stark contrast to the gloom and uncertainty hanging over many other industries.

"The major message that's going to come out of it is that the industry is very strong now," said BMO Capital Markets analyst Edward Williams. "Demand for hardware right now remains robust."

Nintendo Co Ltd's (7974.OS) Wii enjoys a clear lead against Sony Corp's (6758.T) PlayStation 3 and Microsoft Corp's (MSFT.O) Xbox 360 in the current console cycle. All three are expected to lay out plans during the show on how they expect to drive new demand for their machines.

Game fans are awaiting Nintendo's lineup of holiday titles, while Sony is set to unveil a video download service for its PlayStation 3, and Microsoft is expected to cut prices for its Xbox 360 console.

Nintendo, which has spurred Wii sales with blockbuster titles like "Wii Sports" and "Wii Fit," has disclosed little about its software lineup for the rest of the year, leaving both gamers and investors on tenterhooks

"I've been covering this company since 1999. I've never been so unaware of what their big year-end titles are at this point in the year," Credit Suisse analyst Jay Defibaugh said.

The creator of iconic video game characters Mario and Zelda is expected to wade into interactive music video games with "Wii Music," a new entrant into a market dominated by "Rock Band," distributed by Electronic Arts Inc (ERTS.O), and Activision Blizzard Inc's ATVID.O "Guitar Hero" series.

PRICE CUTS?

Sony, which had enjoyed a decade-long dominance in the game industry since the mid-1990s, plans to launch a movie and TV episode downloading service for the PS3 this summer to boost the machine's appeal. The details have yet to be announced.

Sony Computer Entertainment Chief Executive Kazuo Hirai told reporters last month that the PS3 is already connected to big-screen TVs ready for high-definition video, making it a device that can straddle the worlds of video game and non-game content as well as packaged and downloaded media.

Sony Computer Entertainment, the video game unit of Japanese electronics and entertainment conglomerate Sony, has lagged behind Microsoft in creating a online network to rival the software maker's Xbox Live service.

Analysts expect Microsoft to stir up demand for the Xbox 360, which, in recent months, has been competing with the PS3 for second place in the U.S. market, with price reductions.

Media reports have said the best-selling Xbox 360 Pro model could soon see its price cut by $50, to $299. Microsoft has declined comment.

The price cut is likely to come "if not at E3, then shortly around that time," DFC Intelligence analyst David Cole said.

A counter price cut for the PS3 is unlikely as Sony aims to turn its video game business profitable this year.

"Their priority now is not on selling it in bulk, but on profitability and on various network-related challenges," said Mizuho Securities analyst Takeshi Koyama.

COOL GAMES

Besides announcements and developments from the three console makers, a slew of heavy-hitting games from third-party publishers will be attracting attention at E3.

"Gears of War 2," created by Epic Games exclusively for Xbox 360, is expected to be one of the most anticipated titles at the show. The original "Gears," released in November 2006, sold 3 million copies in its first 10 weeks, and gave a strong boost to Xbox 360 hardware sales.

Other high-profile titles include action horror "Resident Evil 5" from Capcom Co Ltd (9697.T) and "Rock Band 2," which is set for September launch and includes a replica Fender Stratocaster lined with a wood-grain finish. Rock Band 2, developed by Harmonix Music Systems Inc, will be published by Viacom Inc's (VIAb.N) MTV Games and distributed by Electronic Arts.

"The guitar looks awesome ... It's amazing how accessories are really becoming important," Janco Partner research analyst Mike Hickey said. "There's a lot of room for growth in 'Guitar Hero' and 'Rock Band' land."

(Editing by Gerald E. McCormick)