Three Game Makers Near Sideline

The difference is that the bigger companies generally have well-defined, proven strategies that succeeded over the course of this last console cycle and tend to have far more financial resources at their immediate disposal than do Atari, Midway or Majesco.

That difference in resources could prove crucial as the next console cycle matures, because development costs are expected to be substantially higher for the next-generation machines than for current ones.

The last year has already seen a winnowing of the competition. Acclaim Entertainment, for instance, filed for bankruptcy, and Tomb Raider publisher Eidos sold its assets to SCi Entertainment. Meanwhile, larger publishers have been gobbling up smaller development houses.

"If you're a smaller company and you're struggling to begin with, it makes it a lot harder to go up against Electronic Arts, Sony(SNE) and Microsoft," says Schelley Olhava, an analyst at industry research firm IDC.

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