MediaFile

Believe it or not, there were crowds gathered on Friday doing something else besides waiting for an iPad 2.  About 60,000 people swarmed Boston for Penny Arcade East, a major  convention for video game fans on the East Coast.

PAX doesn’t garner as much media attention as industry shows like E3 in Los Angeles each summer, where major games companies announce new products. While there aren’t as many reporters or  or executives in attendance, PAX EAST is still a big event for gamers- the hoards of people who help make the $60.4 million video game industry bigger than Hollywood.

It’s for people like Andrew Hydrusko, a 23-year-old student who drove from Delaware with four friends so he could dress as his favorite Mega Man character, Protoman, at the show. He donned a poncho, bullets and a painted motorcycle helmet reminiscent of a power ranger,  as he waited to play Guild Wars 2, an upcoming MMO game from NCsoft.

The publicly-traded Korean company lured people away from the main hall to a neighboring hotel so fans could fully immerse themselves in their game. With a raffle, an open bar and hors d’oeuvres promised, the lines got just as crazy as anything on the show floor next door.

Randall Price, senior vice president of global business at ArenaNet, which develops MMOs for NCsoft, says while PAX East isn’t as high-profile as some other shows, it’s  his chance to interact one-on-one with passionate players of Guild Wars, which has sold 7 million copies since 2005.

The video game sector is often seen as being particularly ripe for consolidation, with some expecting old line media giants such as Time Warner to swoop in and scoop up a publisher to diversify their entertainment rosters.

But Strauss Zelnick, chairman of “Grand Theft Auto” publisher Take-Two Interactive, remains surprised by the lack of action on the consolidation front. “I think the legacy media companies have not been especially aggressive about interactive entertainment,” he said at the Reuters Global Media Summit in New York on Wednesday. His company, of course, fought off Electronic Arts’ hostile takeover bid in 2008.

“I have to admit there are times when I’m surprised they’re not more exposed.”

Much of the buzz in gaming these days revolves around two small but fast-growing areas: social games and mobile ones played on smartphones. But two titans of the video game industry have decidedly different takes on those markets.

There are already tens of thousands of game apps available for the iPhone and competing Android smartphones, and tens of millions of people playing free games on Facebook.

Still, Activision CEO Bobby Kotick (pictured) sounded less than enthusiastic about those markets when he spoke to the Reuters Global Media Summit in New York on Tuesday. And that represented a stark contrast from what Electronic Arts CEO John Riccitiello said just a day earlier

Sprinkled among the snaking lines of parents at a Toys R Us in New Jersey on Black Friday were diehard gamers. Many had no children to spoil. Nor were they particularly happy to be in the Toys R Us; but with gaming hardware fast selling out across the region, they followed the scent of the deal.

The Kinect moved especially fast, if early anecdotal evidence is any measure. Brisk sales of  hardware like the PlayStation3, Xbox and Microsoft Kinect on the nation’s biggest annual shopping spree also bode well for software sales, says Mike Hickey, a Janco Partners analyst.

But which games were enticing fans to shell out on Black Friday?

“ We’re seeing strong sales of Assassin’s Creed: Brotherhood (Ubisoft), Just Dance 2 (Ubisoft), Call of Duty: Black Ops (Activision Blizzard), Red Dead Redemption (Take-Two Interactive), Fallout: New Vegas (Bethesda), Gran Turismo 5 (Polyphony Digital) and Donkey Kong (Nintendo),” Hickey said.

Apple is, of course, absent from this week’s video game extravaganza, the  E3 Expo in Los Angeles. The company just doesn’t do trade shows.  But its presence looms over the event.

Apple has managed to create a whole new gaming market with the iPhone since its debut in 2007. There are tens of thousands of games available for download via Apple’s App Store, and it’s an open debate as to how much the iPhone’s success has hurt the traditional hardware makers, namely Nintendo and Sony, which both make portable gaming devices.

Nintendo is making a big push to differentiate its portable gaming platform with it’s new 3D-enabled DS, which offers a glasses-free experience.

Today is the day that Microsoft fully takes the wraps off of its much-anticipated motion/gesture system “Project Natal” for the Xbox 360 system. Its press conference promises to be one of the most important at this year’s E3 video game industry trade show in Los Angeles. It’s expected to come out in November in time for the holiday season.

The camera-based system got a early pre-introduction to the media last night — and a new name, “Kinect” — in a Cirque Du Soleil event that has been called both amazing and odd. We can’t tell you much about it since I did not attend, and Microsoft banned cameras. But we scoured the world (that is, you know, we googled Youtube) for some reports from those who got a glimpse (and snuck in cell phone cameras.)

Stay tuned for more details about the system and other development from E3. Until then, here’s a demo video of the kinds of things Natal will enable families to do — with no controllers.

Black Friday marks the beginning of the most critical time of the year for video game makers, as customers jam stores on the day after Thanksgiving to pick up games and consoles as gifts.

As a brutal 2009 winds to a close, the gaming industry is hoping that a strong six weeks of sales in the United States, the largest market, could help them salvage something from the year.

Nintendo said Monday its Wii home console — the long-time U.S. champ that has been struggling lately — sold more than 550,000 units in the U.S. during Thanksgiving week. To put that in perspective, the company sold around 500,000 Wiis in all of October, according to industry tracker NPD.

OnLive, the “cloud-based” gaming service that generated plenty of interest when it was announced in May, is opening itself up.

The company is aiming to challenge game console makers Nintendo, Microsoft and Sony with a bold and ambitious service: on-demand, lag-free access to graphically rich games, which can be played on any TV and nearly any PC, even budget netbooks.

Analysts say such a product could fundamentally change the economics of the multibillion dollar video game industry. The only question is how well OnLive works, and some have expressed skepticism. Since its splashy introduction, little has been heard from the company, which was busy testing its service internally and installing servers in its data centers to handle traffic. OnLive delivers games run on servers in the cloud, rather than locally on a PC or a console.

Social gaming startups, which offer free-to-play games on sites like Facebook and MySpace, have been all the rage, scooping up funding from the venture capital community and nabbing executives from traditional gaming outfits. The hoopla seems warranted given the meteoric growth many expect to see in the space over the next few years.

Playdom, which was launched last year but only emerged from stealth mode in March, recently made a big splash when it lured John Pleasants from his perch as COO of Electronic Arts to become its CEO. Playdom battles rivals Zynga — which predicts revenue of $100 million or more this year — and Playfish in an increasingly competitive space.

In an interview, Pleasants called his return to the startup space “refreshing” and used a whiteboard to make a convincing case about the industry’s potential. He pegs the overall social gaming market at around $500 million, but expects that to increase ten-fold in the next several years.

Video game publisher Electronic Arts will report first-quarter earnings after the bell today, amid Wall Street’s hopes of an industry comeback in the second half of the year. June video game sales in the U.S. were pretty dismal, but investors are probably betting on big-name game titles and possible game console price cuts to pump some life back into the slump in the second half of 2009.

Analysts say EA, the publisher of hit football game Madden NFL, likely had a strong June quarter, even though they are predicting a loss per share of 13 cents. Last week, UBS initiated coverage of EA and Activision with “buy” ratings. The firm expects the $39 billion industry to grow to $55 billion in 2012, and believes EA is a compelling turnaround story because of its re-energized game strategy.

Activision, which reports Wednesday, of course remains the industry darling, with an enviable stable of franchises, including Guitar Hero and Call of Duty, new installments of which will be released later in the year.