Staff Reporter Troy Wolverton is in Los Angeles to attend the Electronic Entertainment Exposition -- better known as E3 -- which is the video-game industry's giant annual gathering. He's filing occasional dispatches on news, rumors, sights and thoughts from the show.

Wednesday

Among the console makers, one of the big themes of E3 has been using the next generation of machines to expand the audience for gaming.

At Microsoft's ( MSFT) press event Monday, for instance, J. Allard, who heads up the company's Xbox development efforts, noted that while early video-game systems such as the original Atari console got the entire family involved in gaming, more recent systems have tended to attract just what people now consider the core gaming audience: males under the age of 34.

Each of the three big console makers is hoping their new consoles will attract groups outside that demographic, such as women and older, former gamers. And each seems to have its own strategy of getting there. Nintendo, for instance, seems to be putting the emphasis on games such as Nintendogs, a program in which users care for a virtual canine, and Elektroplankton, a program that enables users to compose music.

Both Sony ( SNE) and Microsoft hope to draw in new users by emphasizing the multimedia capabilities of upcoming consoles. On Sony's PlayStation 3, users will be able to surf the Internet and have video conferences with friends. Microsoft's Xbox 360 will stream music and movies from users' home networks to their entertainment systems and will link with an online marketplace.

Indeed, Allard predicted that Microsoft's efforts to expand the audience for gaming will be so successful that a billion people eventually will play games on its Xbox 360. Considering that sales of the original Xbox have yet to reach 30 million, the company has its work cut out for it.

The new consoles may indeed attract a new audience, but at least for now, many in the game-publishing industry are skeptical. The consumers who buy the new systems at launch are likely going to be the core gamers, they note, who are going to care a whole lot more about playing the latest and greatest games than any of the ancillary functions of the new consoles.

"For all the talk about reaching out to a new audience, the people standing outside waiting to buy the new consoles on the launch day are not going to be your 30-year-old female," says Jeff Brown, a spokesman for Electronic Arts ( ERTS). "She's down cycle a bit."

Behind closed doors on the E3 floor, EA showed off some of the games it has in development for the Xbox 360, including new versions of Tiger Woods golf, Madden NFL football and FIFA soccer. The company plans to have six titles available at the launch of the Xbox 360 and has another 19 titles in development.

Most of the games EA demonstrated were still works in progress, running on what booth workers called "alpha" versions of the Xbox 360 hardware.

The emphasis in many of the demos was on the visual detail the Xbox 360 will allow for. In both FIFA and Tiger Woods, for instance, users could zoom in on individual blades of grass, the stitching on players' clothes, and wrinkles on their faces. EA is also working on providing new viewing angles and adding wrinkles to the game play. The way players control Tiger's club, for instance, has become more precise, allowing players to control how much they slice or lift the ball.

While the console makers have been emphasizing the need to broaden their audience, the theme from the software makers seems to be the idea that they'll continue to support the old consoles while developing games for the new ones. That was a theme struck by Activision ( ATVI) CEO Bobby Kotick in my meeting with him on Monday and one echoed in meetings with EA senior vice president John Schappert and Midway Games ( MWY) CEO David Zucker.

But the publishers have different plans for pursuing this strategy. Midway, which has struggled in recent years with mounting losses, expects to have titles available for the PlayStation 3 when it debuts but will have no titles available for the Xbox 360 at launch, according to Zucker. In explaining that decision, Zucker pointed to the base of installed users for the Xbox, which is a fraction of that for the PlayStation and PlayStation 2.

I'll have more from my interview with Zucker in a question-and-answer article next week. But here are some main points:

  • Although Midway's revenue declined year over year in the first quarter, Zucker still expects sales to jump 40% this year. Results from a single quarter "don't mean anything," he said.
  • The way for Midway to get out of its rut is to grow rapidly, Zucker says. The company hopes to do that by pushing its franchise titles, such as Mortal Kombat, and increasng its investment in creating more -- and more ambitious -- games.
  • One part of its effort over the last two years to increase sales has been to stress game quality. Despite mixed or even poor reviews of recent titles such as Area 51 and Narc, Zucker said that an emphasis on quality has been paying off, noting that the average ranking of its premium-priced games has steadily improved in recent years.
  • The last year has not been particularly good for small publishers. Eidos has put itself up for sale, Acclaim filed for bankruptcy, and Atari (ATAR) struggled with poor sales and reviews of Driver 3, a hoped-for hit. But Zucker said he had no questions about Midway's viability as a stand-alone company, pointing to the strong revenue growth the company posted last year.
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