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About Rainier

PC gamer, WorthPlaying EIC, globe-trotting couch potato, patriot, '80s headbanger, movie watcher, music lover, foodie and man in black -- squirrel!

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Publishers Banking On Next-Gen Consoles To Beef Up Revenue

by Rainier on Nov. 9, 2005 @ 12:54 a.m. PST

Variety is reporting that, sparked by the upcoming Xbox 360 launch, videogame publishers are gamely predicting their revenues and profits are set to grow by "King Kong" margins after what's been a stagnant 2005.

Speaking at day two of an investor conference in New York on Tuesday, companies including Electronic Arts, Activision, Ubisoft and Take2 all suggested the arrival of the 360, along with Sony's PlayStation 3 and Nintendo's Revolution, set to debut next year, will stimulate deeper games that consumers want to play for longer hours, often online.

"This next version of the Xbox represents a great opportunity to grow the entire pie," Bryan Lee, chief financial officer of Microsoft's home and entertainment division, told the confabconfab, echoing promises the tech giant has been making all year. Lee said Microsoft's projections are for 4.5 million-5.5 million consoles to be sold in fiscal year 2006 -- and for 2.75 million-3 million to fly off the shelves in the first three months of launch. That would represent, he hazarded, $1.5 billion spent by consumers for consoles and games in those first 90 days.

Microsoft has established Xbox as the No. 2 console, well behind Sony's PlayStation 2, but lost billions of dollars in the process. It's hoping to gain the lead by launching 360 half a year before the next-gen PlayStation 3.

The first TV ads for 360, which launches Nov. 22 in the U.S., Dec. 2 in Europe and Dec. 10 in Japan, will appear on tonight's episode of ABC's "Lost."

In demonstrating how the 360 works and its varied features, Lee put the accent on the gizmo as "a media digital amplifier" that can run with a multitude of other devices, including iPods and cell phones. It's part of Microsoft's larger play to use the 360 to control all the media in a consumer's home. Sony has the same goal for PlayStation 3. As for the games that are its original raison d'etre, Lee said they represent "the best list ever this Christmas," including a couple of more poetic, female-appealing titles like "Kameo" and "Perfect Dark Zero" -- both from Microsoft U.K. subsid Rare. (For the rest, there were a lot of guns and violence, ever more realistic and graphic.)

Many gamers are sure to disagree with Lee's assessment, since last year's holiday season was the most successful ever with mega-hits "Halo 2" and "Grand Theft Auto: Vice City."

As for the game publishers, their presentations all stressed what Hollywood content players routinely mouth: that owning or controlling intellectual property is the name of the game -- and that like the movie bizbiz, coming up with tentpoles is the way to make the moolah.

Among the soon-to-launch product unveiled at the Harris Nesbitt confab were Ubisoft's "King Kong" game, on which director Peter JacksonPeter Jackson was intimately involved. Buttoned-down Wall Street types had a chance to play that and other games in a video arcade adjacent to the speakers hall.

Ubisoft CEO Yves Guillemot told the Wall Street crowd that the monster title (company officials expect "Kong" to be the No. 1 game title in the U.K. this Christmas) is a sign of its new strategy to focus on big brands -- many of them based on Hollywood movies. "Open Season," based on the Sony CGI toontoon, is expected from Ubisoft next year.

Company's four-year game plan includes doubling revenues and tripling net income as well as trying to introduce three brands every two years.

Among the other presenters, Take Two execs unveiled footage from the May 2006 release of "The Da Vinci Code" game, which looked suitably mysterious and entertaining. That title will benefit from Sony's huge marketing push for the movie. Despite those licenses, the focus for Take Two is on "products we own," prexy-CEO Paul Eibeler said. Among the other titles the company is banking on are the latest installment of the runaway hit franchise "Grand Theft Auto" for the PSP, called "Liberty City Stories," and the newest "Civilization" sequel.

As for Activision, chairman-CEO Robert Kotick said his company's focus is squarely on "franchise building and international expansion." He pointed to the fact that 11 of the company's titles would be inhouse franchises in '06 compared with just four last year. Of those titles not owned outright, he said, "we want intellectual property rights long-term and we want to be selective.""Our strategy is to annualize our franchises, so they are continually in front of the consumer, and to come up with one or two new intellectual properties every year," Kotick said.

Hollywood is being seen as a saving grace for at least one vidgame firm. Troubled gamemaker Atari is staking a turnaroundturnaround on its "Matrix" license, which it acquired several years ago.

Company's new game "The Matrix: Path of Neo" shipped Tuesday, with 1.5 million copies going to stores. Original in-game voiceovervoiceover from Andy and Larry WachowskiLarry Wachowski has the "Matrix" scribe-helmers saying they regretted the ending they created for the film. Game allows the players to create a new ending.

Mention of studios came frequently to the lips of game companies. In an impassioned speech that cited several dispiriting stats -- including a 9% drop-off in so-called hardcore gaming this year -- Nintendo veepveep Reginald Fils-Aime called for a rethinking of traditional shooters.

He compared the current trend of effects-heavy games to a studio preoccupation with special effects and said vidgame firms needed to go through a period of creativity a la the indie film movements of the early '70s and mid-'90s. We see in our business the same thing that's a problem for the movie business," he said. "At some point, the same-old is going to get stale."

Such stats are most beneficial for Nintendo, which lags far behind Microsoft and Sony in appealing to the core gaming audience and has instead staked its future on an audaud beyond young male "Halo" and "Grand Theft Auto" devotees with its GameBoy Advance and DS handheld devices, as well as the Revolution, which won't be nearly as powerful as Xbox 360 or PlayStation 3.

Several questioners from the floor took polite issue with presenters' relentlessly rosy projections for their biz, suggesting that, like Hollywood and its movies, there is still a lot of risk involved in coming up with a hit game.

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