Few first-time participants at the Electronic Entertainment Expo (E3), which wrapped up this week in Los Angeles, would have realised that the $66 billion videogames industry is in steep decline.

Microsoft, Sony, Electronic Arts and other industry giants whipped up the crowd of gamers and developers at the event into frenzy, with displays of high-powered new consoles and previews of popular genre games. For an industry accustomed to dwindling revenue in recent years, the pervasive visual pyrotechnics offered something to look forward to after years of subsisting on franchise-oriented games such as “Call of Duty” and “Halo” that run off aging technology. This fall will usher in the Xbox One and Sony PlayStation 4, which apart from being more powerful than their predecessors, now support cloud-based game play and mobile integration. 

Microsoft unveiled their next-gen console, Xbox One, at the E3 conference

Microsoft unveiled its next-gen console, Xbox One, at the E3 conference

It remains to be seen whether these will avoid the fate of Nintendo’s Wii U, whose disappointing sales since its late 2012 launch have forced the Japanese company to sharply curtail revenue forecasts. The Xbox One will sell for $499 (not available in India till 2014) and the PlayStation 4 for $399 – a hefty bit of change in an era when free-to-play Internet and smartphone games are attracting budget-conscious gamers and millions in investment. “The graphics capabilities of console games are going through the roof, but mobile games are becoming more and more sophisticated too.” said Mike Cuff, vice president of content at Wikipad, which launched a portable gaming tablet at E3.

At this year's E3, the debate raged around how Microsoft and Sony will treat used games, a segment that is growing quickly because the Facebook and iPhone generation seem to be moving away from the traditional practice of shelling out for newly released, highly marketed franchise titles. According to industry tracker NPD, sales of videogame hardware and software have fallen every month, on a year-on-year basis, since January 2012. Still, industry executives were encouraged by the enthusiastic response they received at E3. “There's been a lot of confusion about it, with the rise of tablets and phone games does that have some impact on consoles? Not at all, all that's doing is bringing more people to the world of gaming. said Yusuf Mehdi, senior vice president of Microsoft's Interactive Entertainment Business.

Reuters

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