While sales of the PlayStation 4 and Xbox One are moving at a rapid clip, a sense of transition looms over the video game industry these days — and the imminent kick-off of E3, the gaming industry's annual trade show in Los Angeles, seems to be emphasizing that.
Cumulative sales of the Xbox One and PS4 are more than 40 percent higher than their predecessors after 30 months in the market. Nintendo's Wii U, though, has largely been a non-factor this generation. Virtual reality is getting lots of media attention, but everyone in the industry warns it will be years before it's anywhere close to mainstream. And the industry's two biggest publishers have opted against hosting booths at E3 itself.
"E3 will have a distinctly different feel to it this year," says Michael Pachter, managing director of equity research for Wedbush Securities.
E3 in 2015 was all about big games. "Fallout 4," "Star Wars: Battlefront," "Halo 5," and the long-awaited return of "The Last Guardian" (which was first introduced in 2009 and has been MIA ever since). This year, the show will be more centered on hardware.
Sony and Microsoft are both expected to roll out updated versions of their console systems. Pachter says it's unclear whether Microsoft's new hardware will be significantly more powerful than current versions of the Xbox One. He does, however, expect Sony to introduce an upgraded PS4 that's optimized for virtual reality and 4K gaming, both of which would require notably stronger computer and graphics processing chips.