The games business is buzzing. Hardware prices are falling, consoles are going online, and dealers are gearing up for what they hope will be a bumper Christmas. But most of the excitement was happening off-stage and in back rooms, rather than on the stands at ECTS, the British games industry's annual trade show, which opened last week at Earl's Court.
The action started the day before the show, when Sony announced a £30 price cut on the PlayStation 2, taking it down to £169.99 from September 1. The trade waited for Microsoft to follow, and they didn't have long to wait. Within two hours, Microsoft chopped the Xbox's price to £159.99 from August 30. If consumers were going to see dealers slashing prices, they should see Microsoft taking the lead and Sony following.
Once that was done, the two companies proceeded to chuck games at one another. Sony claimed "over 145 outstanding games" would reach the shops before Christmas. Microsoft said it already had more than 200 titles "with over 300 currently in development", including Ubi Soft's Splinter Cell, the hottest thing since Halo. And, by the way, it had much better graphics than the PS2, a built-in hard drive and built-in broadband networking that the PS2 lacks.
In sum, we are seeing the usual battle between "the latest hardware technology" and "the best range of software", caused by the fact that it generally takes about two years to produce a decent game. Two years ago, of course, the PS2's software was "absolutely awful," according to Rich Depping, a US importer who told Wired magazine: "Our customers are horribly disappointed."
When the new PlayStation 3 comes out, the roles will be reversed. But the current generation of consoles is different, in that both Sony and Microsoft plan to take the battle online. There's nothing new about this: online games have been around for at least 20 years, and PC games such as Everquest have a huge following.
The idea is not even new to consoles: the Sega Dreamcast sprouted a modem so owners could log on to the Dreamarena, send email and play games. The real question is whether enough consumers will sign up for someone to make money from it. Microsoft designed the Xbox for broadband gaming, and has developed its own Xbox Live service, which will be launched in the US on November 15, the Xbox's first birthday.
Sony, meanwhile, has made a pre-emptive strike, releasing its $39.99 Network Adaptor for the PS2 in the US last week. This includes a modem and software to connect to some popular ISPs. Users who buy online-compatible PS2 games can link up to play online. Titles include Activision's Tony Hawk's Pro Skater 4 and Sega's NFL 2K3 gridiron football game.
Microsoft plans to charge $49.95 for its online starter kit, which includes an annual subscription to Xbox Live and a headset that lets players talk to one another. Only six games will be ready at launch, but Microsoft hopes to have 10 more by Christmas and another 50 next year.
But neither company is ready to talk about UK services. Microsoft says it will launch before the end of the year, and it is expected to make an announcement to the trade at its XO2 conference in Seville later this month. A Sony spokesman would only say: "We hope to be making an announcement towards the end of October." Meanwhile, David Gosen, managing director of Nintendo of Europe, pours cold water on both rivals' plans. He says there is a "tremendous amount of hype for something that's a considerable way away in terms of being a mass-market proposition. We could get excited about it in three to five years time."
Either way, there's going to be a right royal rumble at Christmas, with three consoles fighting it out at similarly low prices.
"The pricing down where it is perhaps brings many more people into the market," says Gosen. "I think it's good news for everybody in the videogames industry, but the people who will really benefit are the consumers."
