Page 2

7.The New E3 And The E For All Launch

The summer of 2006 was the time period when shockwaves went through the game industry as word came down that the massive 60,000+ E3 trade show had come to an unexpected end due to publishers not willing to spend millions of dollars on exhibit hall space at the Los Angeles Convention Center. E3's owners, the Entertainment Software Association, decided that a smaller invite-only event was the way to go. The renamed E3 Media and Business Summit launched in mid July 2007 but instead of the LA Convention Center the event was spread out over several hotels in nearby Santa Monica.

The final results of the first mini-E3 were mixed. Many publishers and reporters felt the more intimate settings actually helped to present more info on the games displayed at the show and publishers of course like the fact that the loud and massive exhibit hall of past E3s was gone. However, spreading the event out over several hotels got old really fast for many reporters, most of which missed more than one appointment while trying to walk all over town as well as being shuttled over to the Barker Hanger were many publishers had set up playable game kiosks. Overall the media attention to E3 was smaller than in the past but it still turned out to be an important event in the game industry calendar. Just this week it was announced that E3 2008 would return to the LA Convention Center in mid-July and while it will still be a small invite only affair it's assumed that having one central location should help with the problems that this year's E3 had.

While E3 was being revamped, the show's organizer IDG World Expo announced plans in early January to hold a consumer game event that many had predicted would be the over-the-top kind of spectacle that E3 once was. The E For All Expo was finally held at the LA Convention Center in mid-October but the reception to it was chilly thanks to many publishers deciding not to attend along with high ticket prices and a date that was smack dab in the middle of the busy fourth quarter, meaning that a lot of the games on display were either already on store shelves or only one or two weeks away from being released. The result was that only 18,000 people attended the four-day event (organizers had said in previous interviews that they were hoping for between 20,000 and 30,000 attendees). The 2008 E For All is currently scheduled for the last weekend of August which is already occupied by Penny Arcade Expo in Seattle, a well established consumer gaming convention that had over 37,000 people attend in 2007. It remains to be seen if E For All will move its dates, stick with what it has planned, or perhaps be cancelled entirely.

6. Xbox 360 Hardware Problems

Ever since the launch of Microsoft's Xbox 360 in November 2005, reports on message boards and web sites had numerous users telling their stories of multiple hardware failures for the console. At first, Microsoft tried to make the reported failures sound almost normal, saying that the reports were from a small fraction of Xbox 360 owners. However the reports continued to come in 2006 and 2007, and in late June Microsoft finally announced what many people had already known; the initial design of the Xbox 360 was flawed. As a result, the company announced it would take a $1 billion charge to improve customer support for the console.

That support included extending the Xbox 360 warranty to three years for any issue that had the "red ring of death" error. Microsoft also integrated new heatsinks inside new and refurbished versions of the machine, perhaps to help with overheating (Microsoft has never officially revealed any specific changes to the console's hardware set-up). While the company once again would not comment on what the percentage of Xbox 360 consoles have had hardware failures, the $1 billion charge says volumes about how widespread the failures got.

Since Microsoft's move to correct the hardware problems, there has been a noticeable decrease in the number of people complaining that they have gone through several Xbox 360 consoles. What's really important is the bottom line. People still want to buy an Xbox 360 console despite the hardware issues of the past and this past November saw over 700,000 consoles sold in the US. 2008 should be less of a traumatic year for console owners fearing the "red rings of death."

5. Bungie Breaks Away from Microsoft

The crown jewel of Microsoft's internal game development teams has been Bungie. Ever since the Chicago-based developer was bought by Microsoft and moved to Redmond, Washington in 2000, Bungie has helped Microsoft launch the original Xbox with the sci-fi shooter Halo, extend the first person shooter franchise further with the multi-million selling Halo 2, and finally this year completing the shooter trilogy with the Xbox 360's Halo 3, a game that became a mainstream entertainment media event normally reserved for the release of blockbuster feature films.

You would think that Bungie could write its own ticket at Microsoft but as it turned out Bungie wanted more; it wanted to be independent again. In early October, after word got out via leaked messages on the Internet, Microsoft and Bungie announced an agreement that got Bungie out of Microsoft's direct ownership (specifics were never reported). The company still has lots of ties to Microsoft; it's still based in Redmond and will continue to work on Halo-related games for Microsoft. However the newly free Bungie will now be able to work on its own projects as well, including possibly working on other consoles as well as the PC (Bungie reps have emphasized that their next immediate projects will be for the Xbox 360 only).

The breakaway of Bungie is representative of Microsoft's current uncertain first party game situation for the console. Another internal developer, FASA Interactive, shut down after releasing the critical and sales disappointment Shadowrun earlier this year. Bizzare Creations, who developed all four Project Gotham Racing games for Microsoft, was bought by Activision this past fall which means any future games in the PRG franchise will have to be developed by someone else. Will Microsoft's upcoming first party line-up continue to be strong or will all these changes have a detrimental effect?