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E3 underway in LA amid turbulent times in the video game industry

2012 E3 Expo attendees test out new versions of handheld portable gaming units.
2012 E3 Expo attendees test out new versions of handheld portable gaming units.
Roberto (Bear) Guerra/KPCC

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The giant annual video game conference, E3 or Electronic Entertainment Expo, is underway at the Los Angeles Convention Center. KPCC's Sanden Totten brings us more about E3 and the gaming business.

Game companies are wooing fans with sneak peeks at upcoming releases, fancy parties and plenty of free swag. It's a flashy affair, Microsoft has even used singer Usher to debut a new XBox game called "Dance Central 3."

E3 comes at a pivotal time for an industry that, believe it or not, is in a bit of a slump. Retail sales of video games have declined since they hit a peak four years ago. In the mid-2000's, the market for games seemed unstoppable. Financial research group NPD Group reported that the industry hit record numbers of sales in 2008, pulling in $21 billion. In 2009, sales were down 8 percent, and have continued to slip to 20 percent below their peak. And this year, sales are on track to be worse than any of the past three years, according to Gamasutra's Matt Matthews.

Reasons for the decline of traditional video games range from the lack of a new video game console since the Nintendo Wii, six years ago, to new mobile games on iPhones and the rise of Facebook. A dedicated gaming device is no longer needed. People who used to play Wii Sports and Rock Band are now playing Words with Friends and Draw Something.

Games like "Call of Duty" and "Mass Effect" make millions of dollars, but like Hollywood blockbusters, they cost a lot to make too. Jessie Divnich works with Electronic Entertainment Design and Research, a firm that tracks the game market. He said game companies like Activision and Electronic Arts sink so much money into big games that every title has to be a hit. "And that is where we see the industry going -- is more toward what we see in movies where there is maybe only a dozen blockbuster hits every year. So instead of making three mediocre games now the publishers are making one giant blockbuster game," Divnich said.


Sanden Totten, KPCC Producer and Reporter.