Data Filter - Special E3 Edition

Electronic Gaming Business, May 21, 2003

News-O-Matic

Whassup?: Sony's PS2 video cam/gaming device Eye Toy will be ready for
October, the company announced at E3. The $40 USB camera for the PS2 will
record short video to memory sticks and allow on-camera players to interact
with a limited suite of games.
So What?: The price is right for a Christmas gift or impulse buy, but
interestin the demo at E3 waned after the first day. The human interface is
sluggish and more gimmicky than effective. When tied to broadband and
the upcoming 40GB PS2 hard drive, this has potential for video messaging,
but has limited appeal for now.

Whassup?: Microsoft unveils its Xmas Xbox gadget, the Music Mixer ($40),
which manages a CD library on the console, plays Karaoke (microphone
included), and runs and records audio/video effects mixes.
So What?: Unlike the Eye Toy, this toy is flexible and deep and it leverages
the Xbox's existing assets, that hard drive and 5.1 audio, to excellent
effect. This winner idea could sell some consoles and make the Music Mixer
a dorm room staple.

Whassup?: Sony's PSP handheld device won't be ready until late
2004, but it promises  1.8GB of CD storage and a 480x272 pixel TFT that
can run MPEG-4 video.
So What?: Like the Eye Toy, the PSP announcement was more buzz than
substance, with few particulars about pricing or how Sony intends to make
money for its publishing partners on a handheld platform that has other
game makers fleeing from the GBA or even whether they are pitching
for an older demo. Taking a page from Microsoft's old play book,
Sony seems to be making a vaporware announcement that will scare off
other entrants.

Whassup?: Sony partners with America Online to bring AOL content and
instant messaging to the PS2's online network. Content will include
voice-enabled instant messaging, access to AOL Games (which includes
Electronic Arts material) plus music, movies and online radio.
So What?: While the system really seems to need the upcoming 40MB PS2
hard drive to work effectively, this partnership has tremendous implications
both for AOL, which needs to buttress its flagging subscriber base, and
Sony, which wants to keep the PS2 platform fresh while gearing up the
PS3. The potential marketing muscle here is staggering because AOL
Time Warner can market to more adults and parents than God, and
Sony can market to more youth than J-Lo.

Whassup?: PC game sales dipped noticeably in 2002, according to NPD/
Funworld research presented by the IDSA at E3, to $1.4 billion from $1.75
billion in 2001. In an even worse sign for the platform, unit sales declined
to 58.9 million from 83.6 million in 2002.
So What?: Ironically, this contraction in the PC gaming market has caused
so many companies to flee the platform that a positive shakeout may
have occurred. In a less crowded field, superior titles still sell
exceptionally well, and there is a lot of room for innovation and niche
tastes here. Seamus Blackley, director, Capital Entertainment Group
told an E3 developers' panel, "I think the PC may be the
 best opportunity on the planet."

Whassup?: Ubi-Soft and Warner Bros. will co-publish The Matrix Online,
with Monolith and EON Entertainment developing the title for a 2004 launch.
With few details available, the companies only said that the persistent
world will be set after the end the last movie of the trilogy, which
premieres later this year, and include martial arts action.
So What?: Another in a relentless line of attempts to get the mass market
to warm up to online play. EA's discontinued Motor City Online and
disappointing showing with The Sims Online suggests that fewer non-core
gamers really are interested in massive multiplayer contests than many
supposed. Star Wars Galaxies (Sony/LucasArts) may be the best
bellwether to watch in this category as SOE sources tell us that over
500,000 people have already registered at the pre-release Web site.

Whassup?: Digital Interactive Systems Corp. (www.gameconsole.tv) launches
its DISCover console system, which plays unmodified PC game titles on a TV
in the same pop-in-and-play style as a video console. Starting at $299 for a
low-end model with embedded hard drive and Windows XP operating system
to $545 PVR model, the DISCover links to the Internet to download any
necessary patches or modifications to make games run smoothly as plug
and play. Consumers need to add keyboard and mouse tot eh units, which
can be the size of a portable CD player to mailbox-sized mini-PCs from OEMs.
So What?: A fascinating concept that looks to be two generations away from
being practical. Our E3 demo worked as advertised, with PC titles popping
up automatically and playable from the TV. Hardware vendors may want to
embed this technology in Media Center PCs, but it really makes the most
sense embedded in a Tivo-like PVR. DISC is looking for game publishers
 to give them access to upcoming titles about amonth before release so
 the company can test for compatibility and write any patches necessary
for the system to run the title.
The main conceptual problem here is that many TV-worthy PC titles like
sports games and shooters probably already have standard console
versions.

Whassup?: The lackluster price cuts. Sony and Microsoft announce meager
pullbacks to the $179.99 level, while Nintendo bundles the GC with the GC
Player for $149.
So What?: Take Two CEO Jeff Lapin and Activision CEO Bobby Kotick voiced
disappointment in the press, both expecting a $149 price point to goose
summer sales. Quite right. If Sony and MS are waiting for Q4 to dip to the
lower price point, then it puts console purchases in direct competition with
software purchases.

Whassup?: According to a New Media Strategies survey of 450 videogame
consumers in early May, 67% are more likely to buy or rent a game that has
a movie tie-in, and 22% are willing to buy the game before seeing the movie.
So What?: In our estimation, games based on this summer's blockbuster
films (X-Men 2, Matrix, Hulk, Haunted Mansion) are not set to make a strong
case that licensed properties have fully recovered from their former low
reputation. Some of them may sell well initially, but game design laziness
is evident in many of them and this could sour movie/game fans. Early,
deservedly tepid reviews for Enter the Matrix were already causing Atari
stock prices to fall from the 200% run up they enjoyed in advance of
the game's release.

UK Games Bestsellers (Week ending May 16)

This Week  Last Week  Title/Publisher
1          -          Enter the Matrix\Atari
2          9          GTA: Vice City\Rockstar
3          3          Midnight Club II\Rockstar
4          -          Return to Castle Wolfenstein\Activision
5          4          The Sims\EA
6          1          Legend of Zelda\Nintendo
7          3          Splinter Cell\UbiSoft
8          5          Championship Manager 4\Eidos
9          8          Burnout 2\Acclaim
10         6          FIFA 2003\EA
Source: ELSPA