Game Companies Vie for Best, Biggest Buzz at Industry Show

By Alex Pham

May 18, 2005 12 AM PT

Times Staff Writer

The biggest game at the Electronic Entertainment Expo is generating buzz -- and despite an early lead by Microsoft Corp., Sony Corp. wowed crowds with its upcoming PlayStation 3.

An audience of more than 2,000 was mesmerized Monday by the console’s visceral, movie-like graphics as it showed off a game called “KillZone.” By Tuesday morning, “KillZone” and PlayStation 3 were the talk of the annual trade show, known as E3, which runs through Friday at the Los Angeles Convention Center.

Getting tongues wagging is all the more important this year as Sony, Microsoft and Nintendo Co. prepare to launch new game consoles this year and next. Although prices have not yet been set, new consoles historically have cost a few hundred dollars.

So game enthusiasts rely heavily on a machine’s buzz to determine which to buy. Microsoft tried to preempt its rivals by releasing details of its next-generation console, Xbox 360, Thursday in a prime-time show on MTV.

The move gave Microsoft headlines leading up to E3, but industry watchers said Sony stole the show with its eye-popping demos and copious technical details of its PlayStation 3, slated for release in spring 2006.

Sony “had a pretty broad message, good demos and a wow factor,” American Technology Research Inc. analyst P.J. McNealy said.

Nintendo, which on Tuesday released scant details of its new console code-named Revolution, generated the least excitement, analysts said.

“People aren’t seeing the Revolution as being as slick and as powerful a box” as the Xbox 360 or the PS3, said Michael Pachter, an analyst with Wedbush Morgan Securities. “You just got these two Ferraris, and Nintendo came up with an SUV.”

For Sony, pulling off a good show meant stealing thunder away from Microsoft, whose Xbox 360 is scheduled to hit store shelves three to six months before the PS3. The stakes are high in the $25-billion global industry, where word of mouth can make or break a game.

Microsoft has invested billions of dollars in its Xbox franchise but has yet to turn a profit. Industry leader Sony, by contrast, counts games as among its most profitable divisions.

“Sony is trying to erode Microsoft’s first-mover advantage,” Pachter said.

Many in the gaming media said the Japanese company succeeded.

“People came in with pretty high expectations, but [Sony] just blew them out of the water,” said Tom Russo, director of game editorials at G4 Media Inc., a cable TV channel devoted to games. “Sony’s presentation was very comprehensive, very sophisticated. Xbox 360 looked good, but it didn’t have the same polish.”

Regardless, shoppers won’t have much of a choice come the holiday season: Xbox 360 will be the only next-generation console available. That head start, analysts said, will help Microsoft. But if Sony can sustain its momentum from the expo, it may persuade some with a console on their wish list to wait for a PS3.

“It’s not going to be a liability for Sony,” said Schelley Olhava, an analyst at research firm IDC. “We’re not talking a year, year-and-a-half lead. We’re talking a few months.”

Analysts estimate that Microsoft will be able to sell 5 million to 10 million consoles before the PS3 debuts. Besides, many buyers of Xbox 360 will be hard-core gamers who will end up buying two or three consoles anyway, McNealy said.

“Even if Microsoft sells 10 million consoles before the PS3 comes out, Sony will be fine,” he said. “Fact is, Sony’s sold 200 million PlayStation consoles. Ten million units is not that much in the long run.”

In addition, the initial advantage has not translated to success in the past, Russo said.

Sega Corp.’s Dreamcast console debuted a year ahead of PlayStation 2 but was quickly overtaken, Russo said.

“Just because Dreamcast launched first didn’t hurt Sony,” Russo said.

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Comparing the consoles

Xbox 360

Release date: Fall 2005

Predecessor’s market share*: 25%

Buzz: Good online support; first out of the gate; not as powerful as PlayStation 3

PlayStation 3

Release date: Spring 2006

Predecessor’s market share*: 56%