Main REPORT:

Gather all the media, developers and fans of the consumer games industry in one place – mix this with a smattering of sexy booth babes, and shake vigorously for over three days and what do you have?… E3!

The Electronic Entertainment Expo (E3) has become the landmark exhibition of the consumer games industry – an event surpassing even the Tokyo Game Festival. This year’s E3 however proved more portentous than previous editions. The event saw the launch of the final selection of Next-Gen consoles that hope to reverse the decline in sales of software that ravishes the industry.

Sony started the show in the lead of industry speculation to lead the pack even with the Xbox 360 launched industry experts saw the PS2’s popularity a shoe-in for their sequel system. But then came Nintendo!

The company that originated much of the console game sector had been pushed to last place in consumer media expert perception feeling to have been ‘yesterday’s man!’ With the launch of their Wii console, Nintendo proposed equal if not better graphical performance placing all their hopes in a special player interface, and connectivity. The company showed a raft of titles that use the interface (Wiimote) – and placed the concept of immersion back in the players mind. Linked to the promise of a ‘Virtual Console’ of previous platform glory titles downloadable to play again on the new system and the joke about the Wii renaming of the Revolution died on the vine.

Sony was kicked into second place, by a combination of impressive media management and product placement by Nintendo – proving ‘life in the old dog’. The second blow was struck by Sony itself. Literally the company has placed all their hopes on the PlayStation 3 successor, with increased graphical performance support of exclusive multimedia and connectivity features. But with Sony suffering considerable financial difficulties the ‘razor blade’ concept of console machine manufacturer (sell the razor cheap but the blades expensive) was not an option and the company presented the new system with a hefty $600 price tag for the deluxe system and a November release (Xbox 360 was $350 when launched and Nintendo's Wii proposed a $250 price for a March'07 release).

Sony had to rush some media announcement to try and keep up with the Wii problem they found themselves at E3 – Sony launched ‘The Eye of Judgment’ PS3 peripheral that brought the world of collectible cards battle game to the console market. The object recognition system allows cards captured in the EyeToy-esque viewer represented on the screen as animated objects linked to their value. The ability to recognize other objects and special movements was demonstrated at the show – the hope is that the product will make the PS3 as immersive as the Wii - if not more.

The rushed need to play catch-up on the Wii was evident on information behind the scenes at E3. Sony showed the PS3 with a reworked version of their original Joypad controller – after critical player reaction to the original prototype design (nicknamed the boomerang). But the new production design did not have a number of operational features and Sony played coy to questioning. It was later revealed that a 'rumble' feature and 3D tilt-sensor – hoped to make the Joypad as flexible as the dreams of the Wiimote -- had to be shelved due to the impact of legal appeal against the infringement of the IP by Immersion (see Stinger #373).

After the show Immersion showed a magnanimous posture with the offer of helping Sony get the their new Joypad design to work with ‘rumble’ (haptic force feed-back) features and tilt-switch with the understanding that in offering this support Sony would drop their appeal against the 2004 lawsuit instigated by Immersion against the IP infringement - a lawsuit that Microsoft settled out of court for a reported $26 million. A consumer games source revealed this offer – which would inevitably result in Sony accepting the court ruling and paying an estimated $90 million. Attempting to void the rumble and tilt component of their interface opening up the whole Sony strategy to questions regarding its validity – though excitement in the system from a loyal player base still seemed strong at E3.

As interest diverted to the Wii, Microsoft continued to invest millions into their Billion-Dollar gamble. Poring money into the Xbox 360 platform and supporting Live Arcade connectivity the company hoped that it could cut out a piece of the market having launched first and made-up its shortfall of stock. The hope is that the Microsoft model will succeed while the other manufacturers bleed to death ploughing their valuable resources in keeping up.

While the power struggle took full hold – there was a surprising reliance by software publishers and manufacturers on their arcade provenance – greater than any other year, the arcade industry was called into the service of the console sector to lend it credibility. The South hall went as far as operating a classic arcade to remind players of their pedigree in an exhibit called the ‘History of Gaming’ – but other booths chose amusement as a backdrop.

Namco Bandai Games – Hoping to make a big splash amongst the super-power battle taking place around the booth between Nintendo, Sony and Microsoft; the newly merged operation accounted itself well. The operation hoped that its amusement pedigree would speak for itself. The booth was laid out like a classic arcade, with a slew of classic Namco titles on display, supporting Wii and mobile phone projects. The booth was also furnished with a brand new ‘Time Crisis 4’ (Super System 258) arcade cabinet that proved surprisingly popular and was in danger of overshadowing the console titles. Namco America also placed a number of their ‘Bowl-A-Rama’ (PC Hardware) pedestal systems to surprised reactions. Namco also defined an interest in supporting the new ‘immersive’ tendencies of the new Nintendo console with confirmation of a ‘Wiimote’ enabled version of their popular arcade title Final Furlong, hoping to wins fans.

The company also confirmed that they had been awarded the ‘The Fast and the Furious: Tokyo Drift’ license based on the new film, with a Playstation 2 and Playstation Portable (PSP) release in development schedule for a summer release. The game based on the popular movie series that has reputedly grossed over $270 million at the cinema. How this will affect the amusement version of the movie brand was unknown. Raw Thrills had been extended license for The Fast and the Furious property, and after their original release have developed ‘The Fast and the Furious: Super Bikes’ (PC Hardware) launched this year. Sources close to the Stinger had alluded that an arcade released based on Tokyo Drift was being considered by Raw Thrills; though one Namco source seemed to allude to consideration by the Japanese giant they were thinking of a arcade release based on their license – only time will tell who will actually go forward and realize these possibilities.

SEGA America – The amusement and consumer giant flexed its combined muscle to standout amongst the North American strength of other publishers. The company used their secret weapon to wow the crowds with ‘Virtua Fighter 5’. The first (and possibly the last) time that the Universal Lindbergh VF5 cabinet will be seen by hungry American players; it took the consumer division to actually encourage the Japanese parent to bring a VF5 system over to America – though sources indicated that these units would be placed on test after the show. SEGA America Consumer division representatives seemed resentful about all the questions from fans of the arcade game asking about the possibility of a US release for the beautiful LindBergh cab. A complaint was registered internally that they thought it was unusual to show an arcade cabinet without planning an official statement on the likelihood of its placement in America – and that they were surprised by the interest there was in arcade gaming, when all of their bosses had said the market was dead?

[Stinger will be reporting recent Japanese Private arcade event soon]

Konami Digital Entertainment – The Japanese giant showed an invigorated consumer range showing their split support of the Next-Gen systems. On the amusement front the company used their strength in this sector to underpin their muscle in the market. For the first time on international shores, Konami American executives showed the cream of the BeMania franchise. ’Guitar Freaks V2’ (Viper) and ’Beatmania II DX 13 DistorteD’ (PC Hardware) were presented in all their loveliness. The company even had the e-AMUSEMENT system operating, and some sources spoke of a possible crossover between home games and amusement systems. Also on booth was ‘Dance Dance Revolution SuperNOVA’ (PC Hardware), the company announcing that a PS2 adaptation of the game is in the works; the company using the tag line “From the Arcade – to your home!” to promote their efforts. (How many times have we heard THAT one, or some variation on same? Too many to mention!)

The work that Konami is undertaking to defend their international IP is in the face of strong competition form the consumer sector. Companies like Activision that acquired the developers of the Guitar Heroes brand offer serious competition. The need for Konami to address this short fall meant brining the big guns; many players questioning why Konami waited so long to bring over their games that saw serious play on the Konami booth. 

As the consumer scene undertook a major shakedown, some other legal ramifications that could impact the sector were revealed during the partying through E3. There was concern that as the market slows, some of the cracks regarding patent ownership was raised - key features of games that are now called MMO’s (for Massively Multi-player Online). Now as MMO games represent the only growing game sector of the international consumer game scene. Publishers such as NCsoft that showed at E3 their MMORP ‘AION’, which they hope will be a million unit seller.

These patent questions may represent gathering storm clouds that add uncertainty to the consumer game industry’s growth forecast, which is already getting warning signals from the financial analyst sector. Another unhappy section of the sector was retail. With all the consoles’ online-specific announcements, retailers panicked at the prospect of online e-retailing of games - premonitions of a repeat of what is happening with the music retail market, in the face of downloading.

The impact of consumer on the amusement scene continued to rumble at E3. The event allows many of the industry’s ‘back-room-boys’ to blow off steam. The pressure-cooker atmosphere of the consumer games scene was turned up with the ramifications of the changes in Next-Gen scene. Already a vast number of development studios were tightening the belt (those that still had them to tighten). In the off-show’s hard drinking sessions, some interesting ‘behind the scenes’ information was revealed to Stinger contributors.  For example…

- Status of SNK-Playmore
Last year the company had invested a vast amount in an all-encroaching booth that promised much. Following releases of various PS2 and Xbox titles the reaction with the loyal, if hard put upon, fan base was not brilliant. The reality of the E3’06 presence was much muted with the company taking an off-show floor conference suite. Off the show floor and sources started to reveal much more of the status of the company. The focus of the new development of PSP and PS2 projects, while the reality of the past success of A-Wave amusement development meant that arcade sector was not scheduled to play a part of the company’s future – in a off-show statement, US executives stated SNK-P would focus the majority of its efforts on the Nintendo Wii, and that amusement work had been suspended.

- The Wave Breaks
The drinking sessions at the show continued to reveal much of what had only been discussed previously behind closed doors. AtomisWave, the Sammy-originated architecture, appears dead. (The technology is now renamed A-Wave in its Sammy-Sega incarnation.) Despite all the fanfare, and despite a decent sized library of software, the A-Wave platform simply failed to entertain players…failed to grasp the imaginations of players…and failed to secure the loyalty (or even the interest) of operators. The lack of any new titles announced (even after the surprise ‘Extreme Hunting’ appearance), seemed to put the last nail in A-Wave’s coffin. SEGA has not made a statement on the system’s future for some time now. Though speculated by the Stinger a few months ago, the reality seemed to be confirmed both at the Private Show in Japan and from Japanese representatives that came over to Baby-sit VF5 in Los Angeles.

- Show Attendance Reduced… or controlled?
In an interesting promotion, the organizers of E3 this year cheered their ability to reduce the attendance to what is the largest consumer games exposition. The 60,000 attendance figures claimed for the 2006 event was down from  the 72,000 attendance for 2005. But rather than looking at this as a down-turn in attendance, the organizers were claiming success at reducing ‘blaggers’ and ‘aisle-blockers’. The increase in exhibition fees saw an estimated $100 million spent on the show, parties, hotel accommodation and travel – though the show organizers were keen not to portray the reduced attendance as a precursor of a market decline.

- Consumer Studio Implosion
Continuing the rationalization of attendance, the news that the Nintendo Wii was the de facto winner of the E3 “popularity and eagerness to buy” straw poll took the multi-million marketing campaigns of Sony and Microsoft by total surprise. Along with the marketers the development studios were left in the lurch. Nintendo has been re-known for operating a tight ship regarding software development on their platforms – literally limiting the access to create content, and applying harsh restrictions. With the Wii Nintendo has risen to new heights.

The Studio scene in consumer development is reeling already from closures of prominent developers unable to keep going in a shrinking sector – many walking the E3 floor secretly looking to the next ship to jump to. The news that Nintendo may in reality win the Next-Gen battle was a harsh shock as the remaining studio managers saw the future for their team placed in jeopardy. By 2007, speculation is that over 20% of the current development resource international will have either had to find a home in a new industry to avoid their demise!

What Could this all Mean:

That a once major amusement factory – Nintendo – would score the lead on Sony, after being written off by so many consumer industry experts, showed the experience and resolve of the veteran developer; the company using its fundamental strength of arcade quality ‘addictive playability’ and uniqueness to shake things up. The question is however with the physicality of playability promoted by their ‘immersion’ claims could they lose this lead to another industry that already develops immersive gaming – amusement?