Inside Video Games ; the Next Generation of Powerful Machines Allows Users to Play Games, Listen to CDs, Watch Movies on DVD, Surf the Web - with More Features Coming

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Katie Dorn has four children (12, 10, 8, and 6), and as far as she's concerned, the more gadgets they have the better - digital cameras, MP3 players, Web-site design tools. Her reasoning? "I see this as a way to make them more creative and productive with their free time." She and her husband market their philosophy through Minnesota-based KB Gear Interactive. It produces powerful, yet inexpensive tools for the younger set (see teen-tech story, page 16), which they displayed at the recent Electronic Entertainment Expo (E3) in Los Angeles.

But wait, isn't E3 an annual trade show for the video-game industry? What is a gadgetmaker doing here?

Simple. "We are becoming an entertainment-saturated culture, and the engine driving that entertainment is video games," says Harry Eiss, a professor at Eastern Michigan University in Ypsilanti who studies the impact of media on children. If you want to know the shape of things to come, the E3 is the place to do it, he adds.

The video-game industry is only now shedding its image of "adolescent boys, only!" to emerge as an entertainment juggernaut, pulling in $7 billion annually, about the same as the US film industry.

The race to provide more-complicated and more-powerful computers with high-quality graphics and speedy responses has been fueled largely by the demands of video gamers, not your average computer spreadsheet user.

Each year, E3 vibrates with all these latest innovations in soft- and hardware. Hands down, the big star of this year's three-day expo (May 11-13) was the new Sony console, PlayStation2, already available in Japan (in the US Oct. 26). When the industry heavyweight took the stage to introduce its little black tower, Sony executives underlined the direction of the video-game industry.

"It's not just the future of video games," said Kazuo Hirai, president of Sony Computer Entertainment, "it's the future of all entertainment."

Playstation2 has hit a cultural high mark all its own. The Japanese government has slapped a restriction on how many of the units can be taken out of the country - it's so powerful that the consoles have been deemed military-grade hardware.

Inside this modest-sized box, upon which Sony is hanging its mammoth expectations, is a virtual department store of next- generation entertainment technology: a state-of-the-art DVD player, space for a hard drive, and an expansion unit that anticipates broadband connectivity for a household (with TV, phone, Internet, etc. flowing in and out through a single connection).

Which brings us to an important trio of C's that show where the video-game culture is taking us: communication, connectivity, and convergence.

"Increasingly, you're always interacting with some sort of communication or content," says Robert Thompson, director of the Center for the Study of Popular Television at Syracuse (N.Y.) University. Dr. Thompson points to the convergence of every type of communication device, from the Palm Pilot, which now plays games, to the Game Boy, which will soon include a calendar and organizer. …