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For gaming's big three, the real battle begins

Last year, gamers had a pair of new consoles to get excited about. This year, the video game industry is hoping to maintain that excitement with a crop of some of its biggest game franchises.

If E3 2013 was about hardware, E3 2014 is centered on software. But as traditional game makers flex their muscles, there are plenty of upstarts at next week's trade show looking to steal that thunder.

The Microsoft X-Box display at the E3 Gaming and Technology Conference at the Los Angeles Convention Center, June, 2013.
Getty Images
The Microsoft X-Box display at the E3 Gaming and Technology Conference at the Los Angeles Convention Center, June, 2013.

The thrust is virtual reality gaming. Oculus will be on hand at the Los Angeles Convention Center showing off its latest build of the Rift headset. Sony will be offering demos of its "Project Morpheus" virtual reality headset. Several developers plan to show off VR games. And even VR peripheral companies, such as Virtuix, makers of an omnidirectional treadmill that lets users physically move in their favorite games, will be on hand.

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Facebook's $2 billion acquisition of Oculus in March seems to have spurred increased investor interest in VR companies. In April, Virtuix secured $3 million in funding from a collective of investment firms including Tekton Ventures, Maveron and Mark Cuban's Radical Investments.

"Now that Facebook has bought Oculus, everyone's going, 'Whoa, we've got to get positioned for this,'" said John Taylor, managing director of Arcadia Investment.

That could shift focus away from companies such as Electronic Arts, Ubisoft and Take-Two Interactive Software. All will be unveiling their holiday lineups (as well as titles that won't hit until 2015), hoping the excitement that surrounds the show can be translated into sales-enhancing buzz for the games.

The stakes are particularly high for Activision, which will showcase "Destiny," a new series from Bungie, the creator of "Halo." Activision CEO Bobby Kotick said in May the publisher intends to spend $500 million on the development and promotion of the game.

Gaming's big three—Microsoft, Sony and Nintendo— have a lot riding on the show as well. Sony's PlayStation 4 is off to a strong start with sales of over 7 million units in five months, and Microsoft's Xbox One is doing well, too, with more than 5 million units sold during the same period.

Both companies will showcase popular games, with Microsoft expected to talk about what's next in the "Halo" franchise and Sony showing off the next "Uncharted" game. The "Halo" series has sold roughly 50 million copies and "Uncharted" games have topped 17 million.

Microsoft is at somewhat of a disadvantage, though, since it has already announced that the eagerly anticipated "Halo 5" won't be out until November 2015. The company did promise fans something new that's "Halo"-themed for this year.

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Nintendo's Wii U has been a disappointment so far, selling just 6.17 million units in 17 months. It hopes to see a rebound this year with the recent release of "Mario Kart 8" and the upcoming "SuperSmash Bros."—and it's expected to unveil a high definition new installment of its "Legend of Zelda" series at the show that could win back some fans.

Nintendo is once again eschewing E3 tradition by forgoing its annual preshow press conference, opting instead to speak directly to customers via a Webcast. The publisher has also partnered with Best Buy to offer demos of "Super Smash Bros." in retail locations around the country during E3.

Adding to the chaos is the increased presence of mobile publishers at the show. Gameloft, Tencent and more have rented booth space to show off their upcoming titles, as smartphones and tablets continue to attract casual players away from traditional games.

While the real stars of E3 won't be known until the show wraps up, there's one certainty investors can look for. It will, as always, be a spectacle, that's loaded with news, useful information—and a lot of hype.

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