Franklin Paul

Video game executives are some of the most optimistic you'll ever meet. But you have to think they dream of the good old days (of only one year ago) when the industry was called "recession resistant", thanks to the idea that "cocooning" consumers would, ad infinitum, plop down $60 for games.

Those days may be gone -- just ask Nintendo. Now game makers are eyeing the holiday shopping season, with a lot on the line. Still, many are upbeat. Activision Blizzard Chief Executive Bobby Kotick, for one, says that at its core, the industry slowdown is about the wicked recession, not a shrinking appeal for games.

Reuters: Has the appetite for games dwindled?

Kotick: I think the reason why the take-up rates over the last 6 or 7 months have been what they have been, as compared with where they were, has much more to do with macroeconomics than fatigue in the category. Once you are getting to that gift giving (season), my sense is that you are going to see a change in consumption.

One thing you won't see this the holiday season: a drop in prices from the standard of $60 and up for top shelf games such as Activision's highly anticipated "Call of Duty: Modern Warfare 2" and "DJ Hero Renegade Edition" ($199). Kotick says that the price is right, given the rising cost of development, and the fact that that prices have been steady for a long time compared to that of other entertainment forms.

Reuters: Any chance for price movement?

Kotick: Not that I'm aware of. If you look at the cost of development ten year ago to today and the cost of marketing, our ability to hold prices firm over ten years (is worth noting). If I told you that we had a 4x increase in 10 years in production expenses and even more than that in marketing and selling, we are still holding firm on those low price points.

Reuters: So prices could have been even higher?

Kotick: Yes -- (even) if you just added some inflation adjustment. We have tried to maintain no-price-increases and making sure that the products we are delivering are always the highest quality.

Photo: Reuters Archive

Brace yourself for the next salvo in the battle of the ebook readers (or electronic reading devices, or e-reader, or whatever you want to call them).

Barnes & Noble is planning a "major event" next Tuesday in New York to announce a mystery... something.

The bookseller won't say exactly what it will announce, but we'd be surprised if its NOT a digital book reader, to compete with Amazon's Kindle and Sony's Reader series.

In fact, Gizmodo says it has the goods on the device -- which it says has "a multi-touch display like an iPhone" -- and picture of the device. Click the link and take a look.

What do you think of this device (which may or may not be the actual product)? For that matter, what do you think about e-readers? Are you ready to buy one?

Let us know in the comment area.

Hey Brian Dunn, CEO of gadget lover's cathedral top electronics retailer Best Buy, what's on your short list of five great bang-for-your-buck devices for this holiday season?
(Thanks to the CNN Money reporter for asking this question at a press conference today)

DUNN: My short list?

* (First), on my personal short list -- a netbook is definitely on my short list - and by the way it's a companion device. It's lightweight, it's small, it's great to take on a quick trip.
* (Second) I think the HD Instinct is a very interesting smartphone. [Mediafile: That's Samsung's Instinct HD]
* (Third) I love my Flip HD camcorder. That's a great piece.
* Four, I really love the Ultra Thin OLED TVs are cool. [Mediafile: Um, cool yes. Bang for Buck? At about $2,000 for an 11-inch screen, let's just leave it at cool and move on. mkay?]
* The fifth one, of course, is a gift card , that I can give to the people I love, so they can get whatever it is they want.

Well played, Brian. Well Played.

So what happens when the Apple suggests your handheld game device is sub-par? Out of touch? Passe? 'Dems fighting words, right?

That's what I asked Sony's PlayStation boss Jack Tretton during a recent interview. His response? Keep talking, Apple -- you're only creating more future PlayStation users.

A little background: Earlier this month, Apple's Phil Schiller said this about Sony's PlayStations Portable (PSP) and the Nintendo DS, which have together sold more than 150 million units around the globe:

When these things came out they seemed so cool. But once you play a game on the iPod touch, they don't really stack up anymore. They don't have this amazing multi-touch user interface. The game are kind of expensive. they don't even have anything like the Apps Store to find great games and titles. And they certainly don't deliver a media experience like the iPod that is built into the iPod touch.

But worst is the buying experience. Having to go to the store and trying to find a hot new title is not a lot of fun.

Not long after, Apple CEO Steve Jobs piled on to the New York Times, saying that the new lower price for the iPod Touch would draw in gamers.

Tretton, whose full title is CEO of Sony Computer Entertainment of America, counterpunched:

The gaming heritage and the home of gaming is PlayStation. Dabbling in gaming is nice and 'thank you' for getting people interested in gaming -- because they are going to end up with us.

Its sort of like saying, I got my drivers license and my first car was a beat up Subaru, but if you are ultimately going to be on the track, you are going to be driving a race car, and not something that's basic transportation. So if you are going to be seriously interested in gaming you are going to end up a PlayStation consumer.

Tough talk between two consumer electronics giants.

Personally, I have played games on all three devices -- but not the same games -- so I can't testify to an apples-to-apples comparison. But I'll say this: Poker and Tetris on the iPod Touch? Fun. Super Mario Bros on the DS? Cool. FIFA Soccer on the PSP? Wicked.

(Photo: Sony's Jack Tretten at E3; Reuters)

We caught up with Netflix CEO Reed Hastings at the movie rental company's event where it awarded a $1 million prize after a contest aimed at improving the accuracy of movie recommendations. He spoke about his hopes of working with Apple on the iPhone, the possibility that YouTube will beef up its movie service, and the future of the DVD.

Reuters: What will Netflix subscribers gain from the improvements in the recommendation system?

Hastings: It's doubling the quality of our movie recommendation and that helps our subscribers get more enjoyment from movies. Because more often they love the movie they watch. More often the movies recommended will will turn out to be movies that you love. If you watch a couple of movies and don't like many, you start to watch (sports and other programming). If every movie is incredible, you start to watch more.

Reuters: Netflix video streams on Microsoft's Xbox Live system. What about the PS3 and Wii?
Hastings: Eventually we want to be on all the game consoles, all the Blu-ray players, all the Internet TVs. So we are working in parallel with all of those efforts. Currently our Xbox deal is exclusive and we haven't characterized it more than that.

Reuters: Any plans to work in partnership with Apple and the iPhone?
Hastings: it's something that's likely to come over time. But nothing in the short term. (With) movie watching, we are not focused on mobile yet, but (instead) on the TV, on Blu-ray and on the video game consoles. We will get to mobile eventually, including the iPhone.

Reuters: What of Youtube's potential movie service?
Hastings: I think there will be a lot of competition in this market: Hulu, Apple, Amazon, Youtube, Blockbuster. Internet video is a huge opportunity. And there will be a lot of people engaged, and that is going to be great for the consumer. All of us are going to innovate and compete with each other and provide more and more value to the consumer.

Reuters: How far along are we on the transition to all digital video watching?
Hastings: There will be people doing DVD-by-mail in 15 or 20 years, so I think DVD will last a long time. Our best guess is that DVD will peak for us in 5 or so years. But it is continuing to grow. And the streaming is exploding. So we are getting nice growth in the DVD side and huge growth on the streaming side.

Reuters: What do you make of Blockbuster's store closing plan?
Hastings: Blockbuster and Redbox really compete on  doing the inexpensive new releases, and we are much more the streaming and the catalog. Their closings don't really benefit us. It will benefit Redbox more than it does us.

Reuters: Have you been approached about an acquisition or partnership?
Hastings: We don't comment and any acquisition prospects.

(Photo: Reuters archive)

Check out Motorola's new phone, the Cliq. Reuters reporter Sinead Carew scored a demo after Motorola debuted the phone in San Francisco.

Comcast made a bold $54 billion bid for Walt Disney Co. in 2004. It failed -- but there are those who wonder today if the cable provider might be considering a play for another media giant.

Reuters' Yinka Adegoke takes a look at this idea in a story that recounts the speculation about Comcast's desire to be a major player in Big Media.

Stockholders, who have watched the value of Comcast shares shrink to historical lows, might not be so thrilled about such a move.

Investors worry that Comcast might use growing cash reserves to go after names such as Viacom Inc, owner of MTV Networks and Paramount film studio, or Time Warner Inc, which owns CNN, HBO and Warner Bros despite little evidence of such a move, said analysts.

But then again, the man who fended off Roberts' move for Disney back in '04, Michael Eisner, still thinks there's a chance Comcast is interested in owning content. The former Disney chief told trade magazine Broadcasting & Cable last week:

Comcast won't just be sitting there; they may want to recapture their dreams of going after Disney, but not with Disney specifically.

Does Eisner know something we don't? He says he has "zero information".

In the meantime Comcast could, of course, use its free cash for anything from a share buyback to a healthy boost of its dividend. Sound economic strategy for sure, just not nearly as juicy as a mega merger.

Keep an eye on:

• Readers Digest may file for Chap. 11 bankruptcy (Reuters)
• The Financial Times is adding paid-content and its rivals are following suit (New York Times)
• Universal Pictures' chiefs Linde and Shmuger may be under fire for not delivering summer hits (Los Angeles Times)

A lot may be riding on the release of Microsoft's newest operating system, Windows 7, which is due in October, not the least of which is an expected rush of advertising to support everything from the software itself, to the computers it will run on to the rival computers it will not run on.

This surge of business is seen coming just as the holiday shopping session gets under way and could help spark the economic turnaround that some suggest will come later this year.

Or maybe not.

According to a survey by ScriptLogic, six in 10 companies plan to skip buying Windows 7. Some will pass on the added cost of the upgrade, while others are concerned about compatibility with existing applications.

Perhaps consumers will be less squemish about Windows 7 than businesses. Then again, neither were exactly thrilled about Microsoft's last upgrade -- Windows Vista....

Keep an eye on:

• McGraw-Hill hires Evercore as bankers in effort sell BusinessWeek (Bloomberg)
• Pandora gets financing (TechCrunch)
• Microsoft's Bing - so far so good, trafficwise (New York Times)

Nearly every powerful media and technology executive you can imagine has swung through the idyllic and affluent ski resort town of Sun Valley this week. Here are a few more snapshots from Reuters photographer Rick Wilking...

Michael Dell, CEO of Dell Inc, arrives at the Sun Valley Inn

Harvey Weinstein, of the Weinstein Co arrives at the Sun Valley Inn

Les Moonves, CEO of CBS Corp arrives

Cleveland Cavaliers basketball star LeBron James talks on a phone outside the Sun Valley Inn

Eric Schmidt CEO of Google, Bill Gates former CEO of Microsoft and Nathan Myhrvold of Intellectual Ventures in Sun Valley

(Photos: Rick Wilking)

Reuters reporters Yinka Adegoke, Alexei Oreskovic and Robert MacMillan are publishing live updates from the Sun Valley gathering. Read their updates below or follow us on Twitter.