"In 2003, we want to be No. 1 on the next-generation hardware and No. 1 on PC and interactive," he said.

The addition of more high-margin, wholly owned games, such as "Sims," "Medal of Honor," and "Need for Speed," should boost profitability next year, he said. Wholly owned games made up about a third of revenue this year, an improvement over last year, he said.

The company's EA Sports line was able to beat off the challenge posed by Sega Corp.'s push into the field, he said. The latest title in EA's popular "Madden" football line outsold Sega's "NFL 2K3" by 10 to 1, Probst said, and Electronic Art's "NBA Live," outsold Sega's "NBA 2K3" by 2.5 to 1.

The company has retired its "Triple Play Baseball," title and will replace it in spring of 2003 with "MVP Baseball," developed with a rebuild engine and new development team.

The video game industry is about one-third through the current five-year cycle, Probst said, adding that video game makers could get a boost if XBox and PS2 both cut their prices to $149 from $199 in mid-2003. The installed base of games, which stood at 17.2 million in the U.S. through October, could add 16 million to 18 million units next year after the price cuts, he said.

The tie ratio, or the number of games sold in relation to each piece of hardware, has been averaging about 12 to 1 this cycle, compared with 10 to 1 about five years ago in the previous cycle, Probst said.

The peak of the hardware cycle could be 2003 or 2004, with the software industry hitting its top the following year, he said. The new hardware systems could arrive in 2005 or 2006 with "photo realistic" graphics that allow characters to show human emotions, he said.

While Electronic Arts makes some mature-rated games, Probst said the company won't go into the "gratuitous sex and violence," of such games as Take-Two Interactive Software Inc.'s "Grand Theft Auto: Vice City."