LOS ANGELES -- Sony Computer Entertainment's move into the handheld console market and hardware price cuts were the big news at the Electronic Entertainment Expo (E3) in Los Angeles May 13 to 16. More than 62,000 people turned out for the video game industry's annual gathering, eclipsing the record crowd of 60,000 in 2002.

As usual, new games were the real attraction at the Los Angeles Convention Center as attendees got to see more than 1,350 titles that will arrive at retail later this year, including sequels to hits like "Halo" and 'The Sims." But there were some surprises from console makers who were expected to be relatively quiet this year.

Sony made the biggest splash when it announced it would release a handheld version of Playstation 2 called PSP in late 2004. Preliminary specs call for PSP to have a 4.5-inch screen and 3-D quality graphics. That move--along with Nokia's entry into the market with its N-Gage system--represents a huge threat to Nintendo, which has had the handheld console market to itself for years with Game Boy and Game Boy Advance.

"That announcement surprised a lot of people I talked to but there's been speculation about it for years," said analyst David Cole of DFC Intelligence in San Diego, Calif. "It's still too early to tell what's going to happen but you know Sony is going to be aggressive."

Sony also made a subtle price cut on Playstation 2 when it announced it would bundle the console this summer with a free network adapter for online gaming. The move prompted Microsoft to lower the price of its Xbox console from $199 to $179 effective immediately.

In the online gaming arena, publisher Electronic Arts announced it would begin making online games exclusive for Sony's Playstation 2. Cole said the move could be seen as Electronic Arts' opposition to Xbox Live, which keeps 100% of subscription revenue from online gamers while Sony uses a more liberal business model. "This could be the harbinger of a major battle in the online console game market," said Cole.

But software is what drives the video game industry and hundreds of new games were on display on a dazzling--and deafening--show floor. Many of the new games unveiled at E3 this year are sequels to popular titles including "Metal Gear Solid 3 "Doom 3" "Gran Turismo 4" and "Spider-Man 2."

The focus on sequels is a reflection of how the movie industry operates but Cole said there is a difference. "Most sequels are better than the originals because the publishers address complaints about early versions and make improvements," said Cole. "And they're what consumers want so their performance at retail is fairly predictable."

COPYRIGHT 2003 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
COPYRIGHT 2003 Gale Group