[June 15, 2011] At E3 game giants search for salvation Tweet LOS ANGELES, Jun 11, 2011 (dpa - McClatchy-Tribune Information Services via COMTEX) -- It was meant to be the week when the world video game industry wows its biggest market by announcing the latest and greatest inventions at the E3 video game exhibition in Los Angeles. But in the cavernous Staples Centre in the capital of the world's entertainment industry, the cacophony of explosions, fields of flat screen monitors and excited talk of company pitchmen could not mask the central problem facing the video game business. A Deutsche Bank study predicts that the US video game sector will expand 11 per cent a year until 2014, from the current level of 17.8 billion dollars to 29.8 billion dollars. But the extra 12 billion dollars will come not from the brand-spanking new consoles we can expect to see from industry leaders like Nintendo, Sony and Microsoft. Spending on their consoles will actually drop 6 per cent a year, while social gaming receipts grow by 46 per cent annually, online games grow 23 per cent and mobile games grow 19 per cent, the study predicted. That reflects what many analysts believe is the most severe crisis facing the console game business since it first rose to prominence in the 1970s with the Atari 2600 system and its legendary Pong game. "It used to be that if you wanted to play an interactive game, you could only do it with a console made by one of the big three manufacturers," JT Taylor, an analyst and managing partner with Arcadia Investment Corp told the Los Angeles Times. "The traditional video game guys have lost market share, wallet share, eyeball share and coolness share." Nintendo tried to regain some of that cachet share with its announcement of the Wii U, a new console that will hit stores next year as a replacement for the original Wii that launched in 2006. That game system was massively successful in its first three years on the market when it appealed to casual gamers with its innovative motion-sensing controller. But sales have fallen 50 per cent in the last two years as both Microsoft and Sony introduced their motion-sensing technologies, and the casual gaming scene exploded on mobile phones and Facebook. "In the past few years a whole new area of gaming has opened up in which the power of consoles really doesn't matter," said Feargus Urquhart, chief executive of Irvine, California-based game developer Obsidian Entertainment Inc. Nintendo hopes to change that by adding a second screen to the controller, turning it into a tablet computer and giving players two possible views of a game that the company says will change the way video games are perceived. Nintendo will release more details closer to the launch a year from now. But the most exciting application it demonstrated at E3 was in the game Shield Pose, in which players have to use the controller to block suction-capped arrows fired at them from pirate Ships. It sounds hokey, but test users and analysts have described the game as brilliantly innovative. Nintendo's genius at putting fun back into games for all ages more or less guarantees the Wii U will be a huge hit. So where does that leave Sony and Microsoft? Microsoft is hoping that the popularity of its Xbox 360 will continue to grow, as more users take to the Kinect motion tracking controller. The Kinect is already the fastest-selling consumer electronics device of all time, having already sold more than 10 million units since its November launch. The US software company is betting that the next phase of its growth will come from the hardcore gamers that have hesitated so far to give up on their traditional controllers in favour of the Kinect. Sony could be the big loser however. It introduced a new handheld console called Vita at E3, but such devices are the most threatened by the fast spread of smartphones. The company's Playstation 3 is also fading fast due to the debacle of the security breaches of Sony's online game networks, which exposed personal details of more 70 million customers. The sorry state of the company was aptly summed up by a comment on the blog Gaming Blend: "Poor, poor Sony." To see more of dpa, go to http://www.dpa.de/English.82.0.html Copyright (c) 2011, dpa, Berlin Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com. [ Back To TMCnet.com's Homepage ]