LOS ANGELES - The Electronic Entertainment Exposition - better known as E3 - got a big, if unofficial, kick-off on Monday as two of the video game industry's largest players touted their latest wares.

Microsoft showed off Kinect, formerly known as Project Natal, its add-on for the Xbox 360 that lets users play games, navigate menus and start and stop movies without the use of a remote control or game controller. The company also unveiled a new, svelte, "whisper quiet" version of the Xbox 360.

Meanwhile, Electronic Arts showcased a collection of upcoming games, mostly those that will excite the core, male gamer demographic. They include a new "Medal of Honor" game that is set in Afghanistan amid the current war there.

E3, which officially starts Tuesday, is the game industry's biggest showcase in the United States. Game companies typically use the event to generate excitement about their upcoming products, both by showing off ones slated for release by the holidays and by giving glimpses of others whose release dates are further off.

This year's event comes at a rocky time for the industry. After initially seeming immune to the economic downturn, it has fallen on tough times. Retail sales of its products have fallen in 10 of the last 13 months leaving big game makers such as THQ, Ubisoft and EA struggling with declining results.

At a breakfast talk on Monday morning, Mike Gallagher, president of the Entertainment Software Association, the industry's trade group, tried to put a positive spin on the state of the business. While retail sales of games have been declining, those figures don't include the industry's newer sources of revenue, including the sales of games distributed digitally or to mobile devices, he noted. They also don't include the sales of virtual goods in games on social networks such as Facebook.

If you add up all those sources of revenue, the total is about $5 or $6 billion. Excluding those revenues, retail sales of game products in the U.S. were about $20 billion last year.

"We have a technology that whatever screen a consumer has, they want to use our product on it," said Gallagher. "That's the wind in our sails."

The game industry may be moving into new areas, but E3 is still largely focused on the traditional game business of selling hardware and packaged games through brick-and-mortar retail stores. And the event is dominated by the types of games that core gamers love: loud, violent, and often bloody.

Microsoft didn't disappoint the crowd that attended its press event Monday, when it showed off trailers for three role-playing games. They are the war-themed "Call of Duty: Black Ops;" "Gears of War 3," which is set in a dystopian future where players fight off evil aliens; and "Metal Gear Solid: Rising," which features a powerful sword that can slash through seemingly anything and at just about any angle.

But the company spent much of its event talking about Kinect, which it previewed at E3 last year. Kinect is an accessory that includes a microphone and a camera system that can visualize players and their movements in three dimensions. It allows players to interact with games using gestures and movements, much as they can with Nintendo's motion-sensing Wii remote, but without the use of a handheld controller.

Consumers also can use Kinect to interact with the Xbox 360. They can use voice commands to start and stop movies or play songs. And they can use the camera in the Kinect for video chat sessions with other friends who either have Kinect or are running Windows Messenger on their PC.

Kinect will hit store shelves on November 4. Microsoft says it and its partners will have 15 games available to play on it at launch.

But Microsoft didn't answer the biggest questions about the device: How much it will cost or how will it will market it? Many games designed for Kinect are family-friendly ones that typically haven't sold well among the Xbox 360's hard-core gamer audience.

At its media event, EA briefly talked about family-friendly fare, such as "The Sims 3" and a new version of its "EA Active" fitness game. But it spent the bulk of its time showing off the adrenaline-inducing games that core gamers love. Among the crowd-pleasers: "Need for Speed: Hot Pursuit," a new version of the outlaw racing game that lets users play either as racers or the cops pursuing them; "Dead Space 2," a gory role-playing game in which users battle alien monsters; and the new "Medal of Honor" game.

The company, as it did last year, also highlighted its upcoming "Star Wars: The Old Republic" title and had actors dressed up as Jedi and Siths in the lobby of the theater at which it held its event. But like last year, EA didn't say when the game will be coming out and showed very little of the actual game.

(c) 2010, San Jose Mercury News (San Jose, Calif.).

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