Big players meet to shape video gaming's future

SAN FRANCISCO (AFP) - Rival video game console makers and leading software designers are in California to show off what they hope will be this year's blockbuster titles in the multi-billion-dollar industry.

An invitation-only E3 Media and Business Summit featuring Microsoft, Nintendo and Sony as well as game publishers such as Disney Interactive Studios and Ubisoft begins Wednesday in the seaside town of Santa Monica.

The gathering is a scaled-down re-incarnation of an annual Electronic Entertainment Expo that died after evolving into a sense-numbing high-tech carnival, attracting 60,000 people last year to a huge convention center.

From 3,000 to 4,000 of the video game industry's key players are meeting in hotel suites and a small hangar through Friday to make connections and get previews of titles to be on the market by the Christmas holiday season.

"We've kept it this year to top-tier folk ... people who really do shape the direction of the industry," said Dan Hewitt of the Entertainment Software Association, which organizes the summit.

The gathering begins just days after Sony announced what industry analysts predicted: it is trimming the price of PlayStation 3 (PS3) consoles, sales of which have languished since it launched in November.

On Friday, Microsoft said it expects to spend as much as 1.15 billion dollars fixing or replacing Xbox 360 consoles that evidently overheat and lock up, flashing three red lights users refer to as "the red ring of death."

Microsoft says it has shipped 11.6 million Xbox 360s since the consoles debuted at the end of 2005.

Meanwhile, Nintendo is riding a wave of popularity so strong that it has been selling Wii consoles as fast as it makes them since sales began in November 2006.

Industry insiders wonder whether Nintendo's rivals will try to mimic the motion-sensing controllers in Wii systems.

"It will be interesting to see if Sony and Microsoft look to add more advanced motion-sensing devices to their platforms, as the feature has been key to the Nintendo Wii's success," UBS analyst Benjamin Schachter says.

"Also, investors should not forget that the PS2 is still doing very well, and we think Sony could announce a price cut for it or possibly even new functionality."

Analysts are curious how Microsoft will respond to Sony's pricing of a PS3 model almost on par with the Xbox 360 Elite consoles, at 480 dollars.

Sony cut the price of the PS3 with a 60-gigabyte hard drive by almost 17 percent to 499 dollars in the key North American market and plans a beefed-up version of the console.

"You are definitely going to see news about hardware but the focus is going to be more on titles," Hewitt said of E3. "We are expecting a couple of blockbuster titles to come out for the holiday season."

The video game industry is on track for record-breaking revenues this year, according to NPD Group analyst Anita Frazier.

Five billion dollars' worth of video game hardware and software were sold in the United States in the first five months of 2007, a 47 percent increase from the same period in 2006, NPD reports.

"The video games industry is going gangbusters right now," Frazier told AFP.

"All eyes will be on the content that the three hardware manufacturers announce. Great games are what drive this industry, and without great games the consoles are just machines."