Pushing Graphic Limits: Videogames, the Next Generation

Nintendo and Sony took pains to avoid mentioning their next-generation console systems at this year's E3 videogame conference. But their publishing partners had plenty to say.

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While no independent publishers were willing to come out and call the graphically-intense games they had on display "next generation," many quietly confirmed that they were showcasing what consumers can expect to see when the Xbox 720 and PlayStation 4 finally hit the market in late 2013.

Ubisoft, Square Enix and LucasArts all had titles on display at E3 that push the graphical envelope — and while they will likely appear on the Xbox 360 and PlayStation 3, these systems appear to be little more than launching points.

Ubisoft made the biggest splash at this year's show, announcing the new title "Watch Dogs" at its pre-show press conference. While the game is currently slated forMicrosoft's Xbox 360, Sony's PlayStation 3 and the PC, company officials quietly hint that other systems will be named later — indicating that the 2013 title is part of the launch lineup for the future iterations of Xbox and PlayStation.

Gamers went crazy upon seeing the game's trailer, which was streamed online. It was not only a new intellectual property, but it was also a notable graphic improvement over existing games today.

Ubisoft co-founder and CEO Yves Guillemot deflected questions about whether the game was targeted at next-generation systems, but noted that the extended life of the current systems has muted publisher interest in launching new franchises.

"It's a lot less risky for us to create new IPs and new products when we're in the beginning of a new generation," he said. "Our customers are very open to new things [and] are reopening their minds. They are really going after what's best."

Square Enix, meanwhile, turned heads as it showed off its Luminous Studio graphics engine (tailored to the next generation) at the show.

Both Microsoft and Sony have a vested interest in avoiding talk about the next generation of consoles. For Microsoft, the company is preparing to launch "Halo 4," its biggest game ever — and one on which it plans to spend millions in marketing dollars. Any whisper of forthcoming consoles could scuttle sales of not only Xbox hardware, but also the game itself.

Sony, meanwhile, has a less impressive holiday lineup, but has several major titles on tap for early 2013. The company is also in a cash crunch, and hopes to profit from the PS3 as much as possible while it still can.

But for independent publishers who work outside the console companies — and who have their own investors to worry about — it makes sense to showcase the new titles.

Many gamers believe that the next Xbox and PlayStation will be launched in 2013. By showcasing these games, publishers can work around confidentiality agreements with first-party companies (since they don't name systems or specs), but still showcase the improved graphics and other features of the new systems.

"To me, it's important that we talk about things at the right time with consumers," said Yusuf Mehdi, chief marketing officer of interactive entertainment at Microsoft. "We want to talk to the consumers and we want to keep it simple because there are so many things during the holiday season.

"At Christmas, you have precious little time to shop," he added. "You want to know clearly and crisply, 'here it is.'"

At the LucasArts booth, the company showed "Star Wars 1313," another console game currently slated for the current generation but developers hinted heavily that it could find a home on the next gen as well.

Overshadowing all of this shrouded next-generation talk at E3 is the looming launch of Epic Games' Unreal Engine 4. The current version of that graphics engine (handily named Unreal Engine 3) has powered some of the top games of this generation — including "Gears of War," "Batman: Arkham City" and the forthcoming "Bioshock: Infinite."

Details of that system have not yet been publicly introduced, but rival developer Crytek is getting a lot of publisher interest, according to people in the development community.

"Our next-generation engine is going to show what it can really do," said Cevat Yerli, founder, CEO and president of Crytek.

There may not be any graphically intense next-generation systems launching in the immediate future, but that doesn't mean the development community won't be ready when they're finally officially announced next year.

—By CNBC's Chris Morris
Follow Chris Morris on Twitter: @MorrisatLarge