| LOS ANGELES, June 14
LOS ANGELES, June 14 Few first-time participants
at the Electronic Entertainment Expo (E3) in Los Angeles this
week would have realized that the $66 billion videogames
industry is in steep decline.
Microsoft Corp, Sony Corp, Electronic Arts
and other industry giants whipped up the crowd of gamers
and developers at the event into a frenzy, with displays of
high-powered new consoles and previews of popular genre games.
For an industry accustomed to dwindling revenue in recent
years, the pervasive visual pyrotechnics offered something to
look forward to after years of subsisting on franchise-oriented
games such as "Call of Duty" and "Halo" that run off aging
This fall will usher in the Xbox One and Sony PlayStation 4,
which apart from being more powerful than their predecessors,
now support cloud-based game play and mobile integration.
It remains to be seen whether these will avoid the fate of
Nintendo Co Ltd's Wii U, whose disappointing sales
since its late 2012 launch have forced the Japanese company to
sharply curtail revenue forecasts.
The Xbox One will sell for $499 and the PlayStation 4 for
$399 - a hefty bit of change in an era when free-to-play
Internet and smartphone games from "Angry Birds" to "Clash of
Clans" are attracting budget-conscious gamers and millions in
"The graphics capabilities of console games are going
through the roof, but mobile games are becoming more and more
sophisticated too," said Mike Cuff, vice president of content at
Wikipad, which launched a portable gaming tablet at E3.
At this year's E3, which will end late on Thursday, the
debate raged around how Microsoft and Sony will treat used
games, a segment that is growing quickly because the Facebook
and iPhone generation seem to be moving away from the
traditional practice of shelling out for newly released, highly
marketed franchise titles.
"Sony and Microsoft still have work to do in order to
convince a broad consumer base that they need to spend $400 or
$500 on new hardware, in addition to $60 for each new piece of
software," R.W. Baird analyst Colin Sebastian said.
"There doesn't seem to be as clear a reason to upgrade
compared to prior cycles, which introduced DVDs, 3D and HD to
According to industry tracker NPD, sales of videogame
hardware and software have fallen every month, on a year-on-year
basis, since January 2012.
Still, industry executives were encouraged by the
enthusiastic response they received at E3.
"There's been a lot of confusion about, 'Hey, with the rise
of tablets and phone games does that have some impact on
consoles?' Not at all," said Yusuf Mehdi, senior vice president
of Microsoft's Interactive Entertainment Business. "All that's
doing is bringing more people to the world of gaming."
The high level of excitement at the convention, driven by
the faceoff between the Xbox One and PlayStation 4, was the
noticeable difference from last year, said Keza MacDonald,
editor at games news site IGN.com.
Developers fed off that excitement by showing off what they
envisioned as franchises in the making.
EA unveiled "Titanfall" with mech-style soldiers and robots,
a project led by Vince Zampella, a co-creator of Activision
Blizzard's "Call of Duty." Ubisoft Entertainment SA
announced "Tom Clancy's: The Division," a role-playing
shooter revolving round a pandemic that breaks out in New York
on Black Friday.
"The good news is, we entered the show thinking, 'Why do we
need consoles anymore?' We're leaving the show with, 'Which one
would you like to buy?'" said Peter Moore, EA's COO. "That's a
win for the industry coming in here."
New hardware and software will boost the video game
industry's growth in 2014, Ubisoft Entertainment SA Chief
Executive Officer Yves Guillemot said.
Still, questions remain over how long the good vibes will
last or whether the crowd at E3 is representative of a much
broader swathe of casual and mobile game players out there.
"In the near term, we see pent-up demand among core gamers
for new hardware and software, which should deliver a strong
launch," R.W. Baird's Sebastian said.
"Beyond that, we still need more visibility that Sony and
Microsoft can safely avoid a stall-out like what is currently
plaguing the Wii U."