E3 Notebook: Xbox 360

The Xbox 360 is no more than about six months from being launched, but many developers -- and Microsoft -- still apparently have their work cut out for them.

Few of the actual Xbox 360 games shown at the conference were anywhere near completion -- Gears of War, for instance, was just 35% of the way along, Epic's developers said. And those demonstrated titles were running, at best, on "alpha" versions of the Xbox 360 hardware. That alpha version only has one CPU, as opposed to the three-processor chip the Xbox 360 is supposed to have, and it has an older graphics card than will be employed in the final device.

But some developers were able to show off games on nominal Xbox 360 hardware. Other developers apparently weren't further along. Activision, for instance, has four games in development for the Xbox 360 hardware. But at E3, Activision's demos of those games, which include Call of Duty 2 and Quake 4, were all PC versions -- not the Xbox 360 ones -- company representatives said.

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Grand Theft Auto on the Lam

I met with Paul Eibeler, CEO of Take-Two Interactive (TTWO Quote - Cramer on TTWO - Stock Picks). Eibeler talked about the moves the company is making to diversify beyond its flagship Grand Theft Auto franchise and how the company is approaching the next generation of consoles. Some excerpts:

Take-Two has one of the most ambitious development efforts under way for the Xbox 360, planning to offer eight titles for the game machine at or near its launch, Eibeler said. The company is placing a particular emphasis on its sports titles, he said. Eibeler declined to say precisely how many games Take-Two will have available at the launch of Sony's PlayStation 3, but said the company would put out about the same number as it's planning for the Xbox 360.

Notably absent among the launch titles was a new version of Grand Theft Auto. Although the company is coming out with a new iteration of the game for Sony's PlayStation Portable, Eibeler declined to detail the company's plans for the next-generation consoles. Take-Two worked out an exclusive arrangement with Sony for previous versions of the game, whereby they didn't show up on the Xbox until months after they were available on the PlayStation 2. Analysts have said that those arrangements helped Sony secure its lead over Microsoft in the current console cycle.

Eibeler acknowledged that EA's exclusive deal with the National Football League -- which locked out Take-Two from continuing its competing NFL title -- was a significant setback. But Take-Two is moving forward and still sees the sports genre as a big piece of its diversification strategy. And the company was able to use the long-term nature of EA's deal with the NFL to persuade the other sports leagues to offer Take-Two longer-term contracts than the standard one-or-two year deals it previously worked with, he said.

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The next-generation consoles may be revolutionary, but the games demonstrated for them at E3 were generally evolutionary, at best. Indeed, as some industry watchers noted in conversations with me, all the publishers seemed to be in a rush to copy ideas or do new iterations of their own, earlier games.

Except for The Godfather game, the Xbox 360 games from EA, for instance, were all new iterations of venerable titles such as Need for Speed, Madden NFL Football and FIFA soccer. On the showroom floor, Take-Two demonstrated its latest version of Top Spin tennis game for the Xbox 360.

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