Join Date: Jul 2002
Mercury News: Game industry waiting for new consoles
Posted on Mon, May. 12, 2003
Game industry waiting for new consoles
PRICE CUTS ARE THE BUZZ AT L.A. EXPO
By Dean Takahashi
More than 60,000 of the video-game industry's faithful will converge on Los Angeles this week in search of some antidotes for a slow economy as they impatiently await the arrival of the next generation of console hardware that isn't going to be ready for a couple of years.
Unlike previous years, the biggest buzz at the Electronic Entertainment Expo won't be about the novelty of online gaming or the sizzle of next generation's boxes. It will be about how soon Microsoft, Sony and Nintendo are going to slash the prices on their aging Xbox, Play- Station 2 and GameCube consoles.
With NPD Funworld estimating that game sales grew only 3 percent for the first two months of this year, game publishers need more consoles in the hands of customers to boost their business. And the only way that's going to happen is with major price cuts.
``Everybody is praying for a hardware price cut, or else it's going to be a slow summer,'' said John Taylor, an analyst at Arcadia Research in Portland, Ore.
Price cuts are the usual tactic for moving hardware that is getting old. This Christmas will be the fourth for the Sony PlayStation 2 ($199) and the third for both the Microsoft Xbox ($199) and the Nintendo GameCube ($149).
Some observers believe the major console makers will announce price cuts at the E3 conference. But others worry that the cuts won't occur until the fall.
If the cuts are delayed, that could wreak havoc with the software industry's financial projections. Brian Farrell, chief executive of THQ, currently estimates software will grow 10 percent to 15 percent this year, and Electronic Arts, which typically grows faster than the industry, estimates its own sales will grow 13 percent to 17 percent in 2003.
Sony is the company to beat, with 51 million PS 2 consoles sold worldwide to date, compared to about 9 million each for the Xbox and GameCube. In the United States Sony has pledged it will sell an additional 10 million units in North America this year. Larry Probst, CEO of Electronic Arts, expects 2.5 million to 3 million Xboxes to sell in North America this year and 2 million to 2.5 million GameCubes.
Developers at E3 will also be looking for intelligence about the next-generation hardware plans from the three console makers, which will try to share as little information as possible.
Sony is close to locking down hardware specifications for the PlayStation 3, which probably won't debut until 2005 or 2006. It has said the machine will use a cell microprocessor being jointly designed by Sony, IBM and Toshiba.
Microsoft is working on Xenon, the code name for its Xbox Next console, which is expected to use Intel-compatible chips. Nintendo is working with ATI Technologies on its next GameCube. Both Microsoft and Nintendo say they aren't going to be late with this generation of hardware, as they were last time.
Two small companies will try to capture some attention for their own hardware. Infinium Labs of Sarasota, Fla., will talk about its Linux-based Phantom console that will debut with high-end graphics in 2004. And Digital Interactive Systems of San Gabriel will show a DISCover console that plays PC games on a TV set. But it's unclear how these companies are going to grab consumer attention away from the big players.
Despite the industry's obsession with the outlook for gaming hardware, E3 will still be a place to show off the latest games. More than 1,350 titles from 400 companies will be on display.
More mature titles like ``Grand Theft Auto: Vice City'' have done well in the past year and accounted for 13 percent of units sold in 2002, up from 10 percent a year earlier.
But as more mass-market consumers buy game consoles, this year is also expected to be a good year for children's titles and movie-related titles.
The attention grabbers at the show are sure to include Atari's ``Enter the Matrix,'' which debuts on all platforms and has already shipped 4 million units to retail for a May 15 launch timed with the ``Matrix Reloaded'' movie.
Also high on the list is ``Tomb Raider: Angel of Darkness,'' coming this summer from Eidos Interactive in time for another Lara Croft movie. Activision has ``True Crime: Streets of LA'' and ``The Movies'' coming.
Electronic Arts will show off titles like ``Lord of the Rings: Return of the King,'' and ``The Sims 2'' for the PC. Microsoft will announce it has snared ``Counter-Strike'' as an exclusive for the Xbox and show ``Halo 2,'' which won't ship until 2004.
Nintendo, meanwhile, will tout exclusives like LucasArts' ``Star Wars Rogue Squadron 3: Rebel Strike.'' Sony will show off a fighting game, ``Rise to Honor,'' made with martial-arts star Jet Li.
The PC could be the dark horse of the show. Nvidia will be launching a new graphics chip, code-named NV35, that will enable it to take back the crown of the fastest graphics chip from ATI Technologies.
ATI's chip, currently the fastest PC graphics processor available, will be used to display Valve's ``Half-Life 2,'' one of the most-anticipated titles at the show. And id Software will be showing off ``Doom III,'' a PC shoot-'em-up that will reach a new level of realistic horror in terms of bloody graphics.
``I don't know if any one game will steal the show this year,'' said Taylor. ``The portfolios for the major players are all getting better, and the market is broadening out.''
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