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The US is the largest market for video games, worth some $10.5 billion in 2005. Almost half of US households own and play games on a PC, game console, or portable game player. But the video gaming industry is in the middle of a midlife crisis ? facing aging consoles, layoffs, slower growth, and a disgruntled customer base. The industry is responding with major equipment upgrades, online gaming, new titles to reach non-gamers, and ad-supported online and console gaming.
The next three years will see a generational shift for home game consoles and increased broadband connectivity for all game-playing devices, but this will be an evolutionary rather than a revolutionary shift. Publishers and hardware manufacturers must explore new business models and distribution options to add revenues and retain profitability.
Microsoft's Xbox 360, shown to industry professionals at the E3 2005 expo, has Redmond lighting up the leader board in the game console market. High-definition games, free online connectivity, and a high degree of device and gaming personalization set the pace for where Microsoft wants to take the market. But with the unveiling of the Sony's more powerful PlayStation 3 and the continued huge loses from Microsoft's games division, the Xbox 360 is by no means a guaranteed success.
At Microsoft's pre-E3 press event on Monday, the company showed its next-generation video game console the Xbox 360 to video game industry professionals for the first time which followed the MTV unveiling show that aired at the end November last year just in time for Christmas. Microsofts strategy is unashamedly ambitious ? to be the thought leader and biggest hardware player in the next-generation console battle.