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Workers finish final preparations for E3 2012, the Electronic Entertainment Expo, an annual video game conference and show, at the Los Angeles Convention Center in Los Angeles, June 3, 2012.


At this week's Electronic Entertainment Expo (E3) in Los Angeles more than 120 companies and 40,000 industry pros and media will descend on the three-day trade show, the biggest industry-only event in the game world (no punters allowed), which officially begins Tuesday.

The show's excitement comes from hardware and previously un-announced game reveals. Historically, E3 has served as a platform for major announcements, particularly those regarding new video game consoles and handheld systems.

All eyes will be on Nintendo to see how the company plans to recover after plummeting sales of its current Wii console. The Japanese game giant led the last innovation cycle with record-breaking sales out of the gate, but has since ceded the top hardware spot to Microsoft's Xbox 360 while posting a $461.2-million loss for fiscal 2011. It may be impossible for the Wii U to live up to its predecessor's early success, but crucial factors – including the price of the system and its high-tech, tablet-like controller, as well as launch window software – will be likely be revealed at Nintendo's E3 press conference Tuesday morning.

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"But E3 is more than just a marketing opportunity for game companies," said Julien Lavoie of Entertainment Software Association of Canada. "Companies converge to talk about various aspects of the industry and work out deals. A lot of business is done at E3. No other forum is as important."

This year's show is taking place during a transition period for the global game industry, which American research firm DFC Intelligence estimates will generate approximately $78.5-billion in revenue in 2012. Growth areas are shifting from the sale of boxed console and portable games sold in stores to the distribution of games and extra game content downloaded via console, social, mobile and PC gaming networks, especially those based in fast-rising Asian markets.

The growing popularity of social games in particular will be reflected at this year's E3. Zynga, which owns the popular Facebook game FarmVille and boasts 200-million active users worldwide, will have a large pavilion on the show floor, as will GREE, Japan's largest social and gaming network.

Third-party game makers will fill the majority of the show floor, including Ubisoft, which operates two world-class studios in Canada.

"This year's event is particularly significant for us on many levels," said Ubisoft Montreal CEO Yannis Mallat. "The Ubisoft booth at E3 will highlight the incredible talent of our Canadian production studios, who are leading the development of highly-anticipated games such as Assassin's Creed III, Far Cry 3, and Marvel Avengers: Battle for Earth."

In Canada, sales of physical games from both brick-and-mortar and online stores declined, even though overall revenue to the gaming sector grew by four per cent and the total volume of game units moved increased by 46 per cent over the last six months, according to market analysis firm NPD Group. That's thanks largely to an upsurge in downloadable free-to-play and demo games, as well as additional paid content for titles consumers have already purchased.

But one transition we're unlikely to witness is either Microsoft or Sony announcing their next generation consoles. Microsoft is set to kick off pre-show events with an E3 media conference Monday morning, but with the continued success of its motion-sensing Kinect peripheral pushing the seven-year-old Xbox 360 to the top of NPD's hardware sales charts for 14 straight months, the American company is more likely to focus on software, including the highly anticipated Halo 4.

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Similarly, Sony's rumoured PlayStation 4 will likely remain under wraps at this year's show. The Japanese company is instead expected to centre its attention on new software and features coming to its PlayStation 3 console, as well as the recently launched PlayStation Vita handheld system.

By the numbers:

$74.5-billion -- Global game industry revenue (sales of software, consoles, and dedicated portable gaming devices) in 2011 (Source: DFC Intelligence)

$78.5-billion -- Estimated global game industry revenue in 2012 (Source: DFC Intelligence)

$89.6-billion -- Estimated annual global game industry revenue by 2016 (Source: DFC Intelligence)

77.6 million -- Games "acquired" (through physical or digital channels) by Canadians in last six months: (Source: NPD Group)

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4% -- Growth in Canadian game market over the last six months: (Source: NPD Group)

7% -- Decline in new physical game sales in Canada during the last six months: (Source: NPD Group)

143% -- Increase in paid downloaded add-on content in Canada over the last six months: (Source: NPD Group)

47 % -- Share of current-generation console sales by the industry-leading Xbox 360 sold 236,000 units in the United States in April(Source: NPD Group)

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