Good Times Roll at E3 Videogame Trade Show

LOS ANGELES —  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.


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 consumers."

Mixed feelings

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 riseof 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 Titanfallwith 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 weneed 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 stallout like what is currently plaguing the Wii U.