Appearances can be deceiving, but by the look of the recent Electronic Entertainment Expo, the interactive entertainment industry is faring well. More than 400 exhibitors filled the equivalent of 21 football fields of booth space inside the Los Angeles Convention Center, according to the E3 Show Daily. And the show’s organizers are so confident that E3 will keep growing that they’re moving the event to a bigger venue in Atlanta next year.

Without a doubt, the unveiling of Nintendo 64 and the competitive price slashing by Sega and Sony created the biggest buzz around the showroom floor. No clear winner came out of debates about how the consoles stand up against each other, but a panel of kids was impressed by the graphics of Nintendo 64 games.

All things on-line from CD-ROM links with Web sites to multiplayer gaming to Internet TV (see page 34 in KidScreen’s May issue) were hot topics. Only a small fraction of titles were tying in to the Internet, but you can expect much more of this at E3 in 1997.

Because the Internet allows people to meet and communicate, the medium could be a way to draw more girls and women whose usage of computers tends to decline as they enter their teen years and focus more attention on social activities into the market. A panel of chief executives discussed how to create products that appeal to females, but the only real action seemed to be coming from Mattel Media, Her Interactive and Simon & Schuster Interactive. Philips Media is also treading into the girls’ arena with a single product line.

Publishers, developers and distributors agree that their biggest worry is exposure at retail. Shelf space is growing more scarce and shelf life is falling. But the number of releases a year 1,700-plus entertainment, edutainment and educational titles launched at E3, according to the Interactive Digital Software Association isn’t getting any smaller. This flood of new products is fueled by the large number of new companies that have entered the interactive entertainment industry in the last two to three years.

On-line distribution was raised as a way to avoid these retail concerns. Although large graphics files take a long time to download with current technology, selling software on-line will likely be used more in the future. This new method of distribution will inevitably threaten retailers, and they could respond by viewing it as a problem or as an opportunity. The Internet is also becoming a helpful marketing tool, and could increase kids’ role in deciding what titles their parents purchase by informing kids about products.

Publishers and developers were pondering which platform out of the many video game, home computer and on-line systems will eventually dominate the market. Choosing which platforms to produce for is tricky when developing titles, and companies must also recognize that development costs are rising and development times are getting longer.

Show participants see more consolidation ahead for the industry. Some even go so far as to predict that the industry will eventually whittle down to just four or five key players and several small independents affiliated with these big players.

Despite all of their concerns, companies overwhelmingly say that the market has a lot of room to grow. Lawrence Probst, chairman, president and CEO of Electronic Arts of San Mateo, California, concedes that 1995 was a tough year for the industry overall, but the outlook is looking brighter for 1996 and even better in 1997 and 1998. And Steve McBeth, president of Burbank, California-based Disney Interactive, enthuses that you need only look at a child playing on a computer to know that the interactive entertainment industry has a solid future: ‘We’re not going back.’