BEIJING, May 8 (Xinhuanet) -- The annual Electronic Entertainment Expo, or E3, will kick off in Los Angeles this week, amid a funk for the videogame industry.

Microsoft launched Xbox 360 last fall.

    This year Japan's two game-hardware powerhouses will occupy center stage. Sony will show a final version of its PlayStation 3, while Nintendo is expected to unveil its Wii console.

    But neither product is expected to go on sale until November, giving Microsoft's Xbox 360, launched last fall, a year's lead. "We think that Microsoft is in a position to take the lead, materially, in the fifth-generation game console fight," said Merrill Lynch analysts in a report last week.

    Consumer anticipation of new consoles typically freezes purchases of games for older systems. Console-game sales in the U.S. last year fell to 6.06 billion dollars from 6.25 billion in 2004, according to NPD Group Inc.

    Most analysts expect the industry to resume sales growth next year after the three major providers of game consoles presumably have production lines moving smoothly.

    "Whenever we go through these transition periods -- there's a pretty well-documented history of this -- it tends to freeze the market," said Doug Lowenstein, president of the Entertainment Software Association, which organizes E3.

    Michael Pachter, an analyst with Wedbush Morgan Securities, issued a report this week projecting that game software sales, after falling 5 percent last year, will slip an additional 4 percent this year.

    The good news is that software sales are predicted to rocket up 18 percent in 2007, once Microsoft, Nintendo, and Sony have all released their new game players. Enditem

    (Agencies)