E3 2013: 8 key questions for video game industry

This is it. After all the hype and early reveals, video game players will soon receive an in-depth look at Microsoft's Xbox One and Sony's PlayStation 4.

And along with glimpses into the next generation of home video game consoles, the annoucements of these devices brought a ton of questions (industry understatement of the decade).

Here's a look at some of the key questions leading into this year's E3.

1. What will Sony and Microsoft reveal?

After attempting to dazzle consumers with the Xbox One's countless entertainment features, Microsoft has one thing in mind for its E3 press event next Monday.

"Games, games, games … and more games," says Digital World Research analyst P.J. McNealy. Yes, Xbox fans will finally learn more about the 15 exclusive titles trying to woo players.

Several have already been revealed in some form, including racer Forza Motorsport 5 and Quantum Break, the new franchise from Alan Wake studio Remedy.

Brace for some first-party surprises, too, and some family-friendly content leveraging the Kinect motion sensor. However, GameTrailers host Geoff Keighley says Microsoft can't forget core players. "Xbox gamers want to be surprised and inspired by games and it's mission critical that Microsoft delivers on this," he says.

As for Sony, E3 should provide our first look at the PlayStation 4 hardware, a noticeable absence at their February reveal. McNealy expects Sony to "pump features of their online network driven by the Gaikai acquisition" as well as focus on the PS4's entertainment capabilities.

Games will also factor heavily into Sony's press event Monday night. The publisher will likely unveil more on announced PS4 titles such as inFamous: Second Son and the latest Killzone entry.

2. How much will these new devices cost?

The last time Sony revealed the price of a new home video game console, it did not end well. In 2006, they detailed two PlayStation 3 models for $499 and $599 respectively.

Don't expect the same mistake this year. "Anything $500 or more would be a real blatantly dumb move," says McNealy.

However, the PS4 and Xbox One won't be cheap. Industry analysts says the consoles could fall somewhere in the $400 range. "The guts of the machines are pretty similar, so I don't expect a big price difference between the two unless one adapts a subsidized model and the other doesn't," says Keighley.

Microsoft has experimented with subsidized game consoles, offering a $99 Xbox 360, so long as consumers signed up for a two-year Xbox Live Gold membership at $15 a month.

Wedbush Securities analyst Michael Pachter says the Xbox One could end up the more expensive device based on what's included in the box. "Xbox One will price at $399 and the PS4 at $349, with the difference being the cost of Kinect," he says.

3. Which of the new consoles has the edge heading into E3?

The battle between Xbox and PlayStation today is a tight one.

The PS3 passed the Xbox 360 on global shipments last December, according to research firm IDC. However, NPD Group data finds the Xbox 360 has been the best-selling console in the U.S. for 28 straight months.

"Microsoft has been able to control the North American market share, while Sony is more rounded worldwide, with both consoles having nearly identical sales and player engagement levels," says Electronic Entertainment Design and Research analyst Jesse Divnich.

Deciding which of the new devices has an early edge depends on perspective. Forrester's James McQuivey says the platform's stellar online network gives Xbox One an advantage.

"Xbox Live has built a solid base of connected gamers that will be hard to shake from that platform," he says.

AIC Research's John Taylor also give Xbox One an edge for a broad entertainment package. "It could appeal to a larger audience."

For the core video game player, PlayStation 4 that has the upper hand. Ben Howard, vice president of programming at GameSpot, says a recent poll of players hosted on their site found 85% favored the Sony console.

"They feel like they were a little bit abandoned by Microsoft," says Howard. "They didn't see enough on the game side."

There's also lingering confusion over several Xbox One features, such as the role of used games and a required, persistent online connection.

4. Would Sony and/or Microsoft be crazy enough to curb used games?

Debate over the place of used games reignited after Microsoft's ambiguous responses to how pre-owned titles would function on the Xbox One device. Confusion grew worse Thursday when Microsoft divulged more details on how lending and reselling Xbox One games will work.

Sony has stepped forward to say they won't block pre-owned games, but they've been equally coy about the role used games will play on its PS4.

The used games market has been a key avenue for players to snag titles below the $60 price tag. It might even help fuel the sale of new titles. In an interview with Gamasutra, used games king Gamestop claims 70% of credit handed to players from pre-owned game sales goes toward buying new titles.

Those used game sales have helped GameStop's bottom line. During fiscal 2012, 48% of the company's gross profits came from selling pre-owned video game products.

Video game publishers have a different view. "Publishers and format owners are most unhappy with used games taking away sales from new games (thereby shortening the game's life cycle and profit tail), and not being able to control the pricing mechanism," says Arcadia Investment analyst John Taylor.

So what's the answer? McNealy says PS4 and Xbox One could include online fees to play pre-owned titles online. There are also several reports games could carry digital rights management (DRM) technology to limit used titles.

Also complicating matters: the increasing role of digital downloads. "In the past consumers have been able to trade their games back in at retail," says Keighley. "But how will that work in the digital world? Microsoft and Sony have both been vague about this part of the equation."

5. How can the Wii U recover from its rough start?

It didn't take long for video game players to forget the Wii U, last year's star of E3. In 2013, they're fighting for attention with two new competitors entering the fray.

The Wii U has struggled to catch on with consumers, notching global sales of 3.45 million since its November launch. That's well behind its predecessor.

"The Wii U never crossed over to the mainstream like the Wii," says Keighley. "Nintendo never overcame the perception that the Wii U was a new controller for the Wii and not an entirely new system."

The Wii U has also been unable to shake comparisons to current consoles PS3 and Xbox 360, and it will get worse once Xbox One and PS4 up the ante on graphics.

But it's still early in the Wii U life cycle, and Nintendo boasts an incredible first-party lineup. "They need to get their big titles -- another 3D Mario, another Zelda game, Mario Kart, Super Smash Bros. -- things that (fans) buy Nintendo consoles for," says Howard.

Nintendo has already hinted at the arrival of Mario Kart, and they could still pull a Super Mario, The Legend of Zelda, or even Metroid surprise. Regardless of what Nintendo announces, first-party titles should tempt consumers into embracing Wii U. "Nintendo is among the leaders in game quality," says Divnich. "They always have been and their strong brands have played a crucial role in their success over the last 20 years."

6. How soon before the PS3 and Xbox 360 drop in price?

One of the great benefits to the video game hardware transition is the opportunity for consumers to jump in on the current generation for cheap.

McNealy says consumers could see lower-priced Xbox 360 and PS3 consoles as early as August or September, right before the arrivals of their successors. As for pricing, Pachter predicts both could drop below $200.

The industry is ready for a new console generation, but don't be quick to dismiss the 360 and PS3 yet. "In many ways, there is a lot of life left in the current machines," says Keighley. "We still have Grand Theft Auto V coming in September, a huge event, and a lot of the major titles this holiday season will be available for both the new and old systems -- games like Assassin's Creed IV and Call of Duty: Ghosts.

7. How safe are the 3DS and Vita?

After an early slump forcing Nintendo to slash its price a few months after launch, the 3DS is enjoying a healthy rebound. Sales of the 3DS are ahead of the pace of the original DS, the best-selling dedicated handheld ever. Also, sales of physical and digital titles soared 55% in 2013.

"The 3DS is in great shape and one of the most successful hardware platforms Nintendo has ever had," says McNealy.

Along with an $80 price drop, the 3DS has benefited from an improved library boasting titles such as Super Mario 3D Land and Mario Kart. But the rising competition from smartphones and tablets still looms.

"The 3DS is doing great, but I think it will be challenged to sell significantly more than 15 million units per year," says Pachter. "That's a great number, and Nintendo will most certainly be profitable on handheld hardware and software sales, but it is only around half of the DS' sales levels. Future sales will be challenged by smartphone and tablet penetration."

Meanwhile, Sony's PlayStation Vita continues to flounder. According to an Ars Technica report from April, total Vita sales in the U.S. are just above one million.

"The Vita is not particularly healthy, for the same reasons as the Wii U's failure so far: pricing is too high, the controls aren't sufficiently novel, and there aren't enough games," says Pachter.

8. What games will grab the most attention?

Let's start with Destiny, the shooter from Halo powerhouse Bungie and Call of Duty publisher Activision. "The fact that they are doing an online connected shooter is very exciting," says Howard.

Then there's the recently leaked TitanFall, the long-awaited action title from Respawn Entertainment, which was founded by the creators of Call of Duty.

Divnich says the usual video game suspects such as Battlefield and Call of Duty will also spark some buzz, but "every year there are a few surprise titles."

Follow Brett Molina on Twitter: @bam923