E3 2013: What Exactly Do You Need?

If you're a hardcore gamer, the news from this year's E3 show in LA is awesome: both Microsoft and Sony showed off the new hardware and games for  their next-generation consoles: both the Xbox One and PlayStation 4 represent significant technological leaps forward for their respective companies.

So everything's amazing, right? Well, there are a few looming clouds and the week's presentations threw both the opportunities and the risks for the gaming world into strong relief.

There was a massive Battlefield 4 tournament going on all week on the show floor.

There's an old adage in music business: steady business from hardcore fans gives you a comfortable living, but you've got to capture the attention of those folks who only buy one or two albums a year if you want to get rich. You could say something similar about the book and movie businesses: it's not their regular customers who made The DaVinci Code and Titanic the overwhelming cultural blockbusters they were.

In an era where a few games have broken out into big mainstream franchises (Halo, Call of Duty) and development budgets have shot through the roof, the gaming business now aims to create hits that can compete with Iron Man 3 and The Big Bang Theory as much as they can with each other.

Xbox One fans are mesmerized.

The Xbox 360 launched in fall 2005 and the PlayStation 3 followed a year later in 2006, so both platforms have started getting long in the tooth: the market for new players has pretty much been saturated for a while now and, despite a few monster hits, broad-based excitement for new games has waned in the last couple of years.

PS4 fans are hypnotized.

Enter the new consoles. Both the PlayStation 4 ("Holiday 2013" release date) and the Xbox One (November 30 release date listed at Amazon) feature new processors that create huge opportunities for game developers to expand their capabilities.

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EA Sports' new Ignite game engine

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Call of Duty Next Gen Engine Tech

Both of the videos above do a good job of showing off the tech, but seeing it demonstrated in person is way more impressive. EA wants everyone to know that both offensive and defensive linemen will now play active roles in the next Madden NFL 25 game and that the players in all their sports games can now have eerily realistic facial expressions. The Call of Duty: Ghosts clip demonstrates just how much more detail can be generated with all that extra horsepower under the hood.

Which leads to some big questions: games look pretty amazing on both the Xbox 360 and the PlayStation 3. Did the current slowdown in the games business happen because gamers thought those platforms had reached the end of their useful lives? Are the sales slowdowns a function of the quality of the games? Have videogames saturated their potential audience and hit a wall that precludes any future growth?

Assassin's Creed: now with pirates.

Seriously, the next-gen games are breathtaking. But many of the the biggest fall titles (Call of Duty: Ghosts, Battlefield 4, Madden NFL 25, Assassin's Creed IV: Black Flag, Watch Dogs, Just Dance 2014) will be released on both the current and next-generation consoles. Will casual fans care or even be able to tell the difference between Call of Duty on a PS3 and a PS4? It's a scary question.

Complicating matters is the upgrade cost: an Xbox One lists for $499, while the PlayStation 4 will be a relative bargain at $399. Nintendo's Wii U has been a huge flop so far and it's hard to tell if that failure is due to the new platform's limitations or it's just that Wii users were happy with their current consoles and didn't see a reason to spring for a new box.

Here's another issue: neither the Xbox One nor the PlayStation 4 will allow you to play your old games. If you buy a PS3 copy of the next Madden and then get a PS4 for Christmas, you'll have to buy a new copy of the game if you want to play it on the new machine. If you still like to pull out you copy of Black Ops every now and again, you won't be able to sell your old console to fund an upgrade.

On a positive note, "Titanfall" looks like the real deal.

There are more looming issues with the Xbox One: the device will require that you connect it to the Internet at least once every 24 hours to stay operational and there's some question as to how free gamers will be to resell used game disks once the purchaser has registered them with Microsoft. Sony made a big deal about this: they won't require an online connection and specifically announced that they won't place any restrictions on game resales.

Of course, Microsoft's Xbox Live has always been a far more advanced platform for online gamers and that platform pretty much requires an always-on net connection. The Xbox One also has even more home entertainment options, features that could make it a good substitute for a Roku, Apple TV or maybe even a cable box.

And that's the big bet: if the next generation of gaming consoles are going to be a huge success, they need to attract an audience that will use them as a substitute for a Comcast, Time Warner or DirecTV box in their living room.

Over the next year, each platform's success will depend on a series of games exclusive to their respective consoles. If  Ryse: Son of Rome or Quantum Break turn out to be a Halo-sized hit for the Xbox One or inFAMOUS: Second Son or The Order: 1886 becomes the the PS4's equivalent of God of War (or if games exclusive to both next-gen consoles like  Final Fantasy XV or The Crew really take off), then gamers will feel like they have to upgrade, no matter how they feel  about Call of Duty.

One last thing to consider: Grand Theft Auto V just might be the most anticipated game of the year and it's appearing on neither one of the new consoles.

If the gaming industry's future success is determined solely by the quality of the technology behind the new consoles, then it's going to be an exciting few years ahead. If customers are turned off by the high cost of upgrading and a lack of backward compatibility for their older games, then things are about to get really weird.

We'll have a lot of stories over the next few months about some really exciting new games and technology on display at E3. Keep checking back for more.

If you've got time for the full rundown, you can check out the full E3 press conferences below:

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Sony Press Conference

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Microsoft Press Conference

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Ubisoft Press Conference

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EA Press Conference

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Nintendo Presentation