Videogames: 12 Coolest Products at E3 Expo

From advanced 3-D to advanced virtual reality, the latest generation of videogames is poised to redefine entertainment. VIEW OUR GALLERY of the best, craziest, and most far-out products at this week’s E3 Expo.

The days of poor Pac-Man’s endless pursuit of pac-dots may be long gone, but exciting times for the video game industry are ahead.

As E3, the annual trade show where videogame companies tout their newest products and preview their upcoming fall releases, has proved, the videogame landscape is rapidly changing. While aficionados can look forward to more complex games and more realistic, 3-D game play, more options also promise to bring a wider demographic into the gaming market that has been excluded since Atari was outmoded decades ago.

Click Image to View Our Gallery of the 12 Coolest New Products at E3

“The future of games is more accessible, more affordable, online, on demand, and able to be enjoyed everywhere you go,” says Scott Steinberg, founder of GameExec Magazine and Game Industry TV. “There’s no longer a single style of game play.”

Videogames have become a more relevant medium, culturally and technically, as the offerings have expanded. It’s no longer about sitting in front of a television with a controller and a game cartridge. Players can interact with addictive videogames on mobile smartphones, via Facebook, and by downloading updates to games that were digitally downloaded in the first place.

Also, as consumers have retreated from more traditional forms of entertainment, leaving television ratings and box-office receipts in decline, videogames have emerged as a leading form of entertainment. They are a way for users to interact in a virtual, community space.

One area of development is motion-based gaming, in which players’ motions drive the virtual action. Driven by the breakaway success of Nintendo’s Wii, which has attracted baby boomers and toddlers alike, Microsoft and PlayStation both have announced motion-based options. Microsoft’s Kinect is a piece that plugs into the Xbox 360 and uses a 3-D camera to track 48 movements on a player’s body, as an on-screen avatar impersonates the movements. PlayStation’s Move is a series of peripherals—a controller, a navigator, and a camera—that also promise more sophisticated motion-capture capability (all the better to aim punches and crossbow arrows).

Another bright spot in videogame progress is 3-D. Just as movie studios and theaters, as well as television manufacturers, are hoping that consumers will rally around all things 3-D, videogame makers are eager to inject new excitement into the format with 3-D consoles and games. For now, the offerings are remote, as a 3-D television or “clunky” glasses are required and marketplace acceptance is unproven. But the technology is clearly improving, as Nintendo proved with its release of Nintendo 3DS, a portable player that doesn’t need glasses.

Of course, the games are getting more sophisticated, too. At Sony’s press conference on Monday, CEO Kazuo Hirai said, “What Avatar did for 3-D movies, [games like] Killzone will do for 3-D games.”

Elsewhere in the game category, classic characters and bankable franchises reign. Mickey is a headliner for a new Nintendo Wii game, Epic Mickey, which features striking graphics and a clever weapon choice: paint (and paint thinner). The Twisted Metal franchise is getting an update for PlayStation 3, Rock Band is introducing interactivity with real instruments in its third iteration, and Jedis and Siths will return with Star Wars: The Old Republic.

Right now, innovative products that will appeal to consumers are particularly important. Consumer-research firm NPD group recently reported videogame sales fell 22 percent and console sales fell 37 percent in April 2010 compared to April of last year. For the year to date, software sales have declined 8 percent.

According to PricewaterhouseCoopers, the forecast is bright. Its report released Tuesday predicts a 7.2 percent growth in consumer spending to $15.3 billion on videogames (hardware, software, and accessories) this year. The entire media and entertainment sector is predicted to experience comparatively lackluster growth of 1.2 percent.

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But retail is ultimately only one way for the gaming industry to earn revenue and consumer interest. The business of virtual goods, highlighted by the success of FarmVille maker Zynga, has been thriving and has helped the industry to expand in scope and value, especially as consumers are becoming more mobile.

“I think we’re experiencing a renaissance,” says Steinberg, who has covered the industry for 17 years. “I’ve never seen a healthier time. Everything is changing, right down to what we consider a videogame.”

Lauren Streib is a reporter for The Daily Beast. She was previously a reporter for Forbes.

—Additional reporting by Clark Merrefield