With the electronic entertainment expo (E3) firing up this week in Los Angeles, the battle for control of the broadband console gaming market shifts into a higher gear, with industry players exchanging barbs among fellow competitors. One such competitor, Microsoft, has just announced a 2 billion dollar plan to compete for the broadband gaming throne, and dreams of unseating the incumbent Sony and Nintendo, both of whom have no intention of going anywhere.

It wasn’t too long ago that gaming was an intellectual fringe hobby populated primarily by the socially and hygienically challenged, who you could generally find hovered over a computer after school tinkering with machine language in the hopes of creating the next great adventure for the Apple 2 or IBM compatible. Game developers usually ran businesses out of their garage, offering pc games in the back of hobbyist magazines, shipping their final product in Ziploc bags with manuals consisting of little more than a folded piece of paper.

Early on-line gaming consisted of Multi-user text adventure games and turn based text strategy games such as Trade Wars. Limited by blistering 300 baud connection speeds, text gaming via bulletin boards was a popular pastime, but nowhere close to the mainstream distraction it would eventually become. As connection speeds inched upward, games became slightly more interesting, but it would take a much wider pipe before true on-line gaming became viable.

The first generation gaming consoles introduced by companies like Atari and Intellivision brought gaming into the living rooms of middle income families worldwide. Likewise, the current generation of gaming consoles will be responsible for introducing broadband gaming to the less affluent, less patient, and less technical (at least when compared to its PC counterpart). The new generation of consoles has also slowly eaten away at the stigma that video gaming is the domain of children and introverts.

While the emergence of the modern internet and such games as Quake and Half-Life and their assorted modifications brought a new popularity to on-line gaming, the sometime daunting technical aspects of getting these titles to run correctly has managed to keep a large portion of on-line gaming confined as a playground of the semi-technical and patient, and not fodder for middle income mass consumption. Patches, modifications, add-on files, learning curves and "newbie intolerance" leaves a vast majority of possible customers left out in the cold.

Over the past decade, the industry has evolved from a fringe hobby into a driving economic force populated with corporate giants. The new players in this console revolution met this week at the electronic expo in Los Angeles, and didn’t spend much time settling in before letting it be known that this is not a hugs and kisses kind of business competition. Sony president Kaz Hirai let loose a bit of trash talking, stating "The console wars are over. I liken the gap with our competition to the Grand Canyon."

Sony has a right to strut, having already sold 30 million Playstation 2 units worldwide, compared with 4 million for each of its rivals, Microsoft and Nintendo. Sony’s Playstation 2 has been on the market roughly a year longer than either competitor, and is enjoying the golden years of its gaming library. Sony has been realistic and cautious with its approach to broadband gaming, shipping the console with no internet connectivity, but always leaving the possibility open.

The company has recently unveiled adapters in Japan, and will release a broadband adapter in the United States this fall, along-side an impressive line-up of multiplayer titles. Sony’s on-line component will be an open system, meaning it will work with any ISP. Sony is offering the connectivity and offering the titles, essentially handing the control of the operation to the users with a "wait and see" attitude, hoping that communities develop on their own.

While Sony chieftans might have you believe the console wars are over, they should probably hold off on the order for victory balloons and party favors. As one Nintendo vice president of marketing recently said: "I think they know now the battle is on." Both Nintendo and Microsoft's consoles are very young, slightly more powerful, and have yet to develop a substantial software library. Both consoles also have their own competing broadband plans in the pipeline. Sony on the other hand, is currently enjoying the primetime phase of their console's lifespan.

Nintendo recently announced their plans to release both dial-up and broadband adapters for their gamecube console sometime this fall. The winner so far in a recent flurry of price cuts, the 149 dollar Gamecube looks to stay competitive, promising on-line titles such as "Phantasy Star On-line" from their now defunct hardware competitor, Sega. The adapters will look to retail for $39.95 each, and the on-line system deployed by Nintendo will also be "open", mirroring the approach by Sony.

Microsoft's plan differs somewhat from its two competitors. Having already included an ethernet adapter in their Xbox console as a gamble on the pace of broadband deployment, some users are already playing Xbox titles on-line via the use of third party software like Gamespy Arcade. Microsoft plans to launch their official service this summer, but unlike Nintendo or Sony, the service will be subscriber based, a decision that may haunt them over time.

Microsoft is planning to sell a $49.95 on-line gaming package that would include a headset for on-line voice-chat, as well as 12 months of access to their Xbox live service. The closed system approach raises the specter of serious headaches for Microsoft, having to suddenly contend with content control, act as morality police, and maintain a massive new network. This doesn't automatically dictate failure for Microsoft however. Expect users to develop their own alternatives to run parallel with the subscription model. Games are the industry cash cow, but a formidable hardware base needs to be in place to succeed. The on-line service may pad the losses on the hardware side, though Microsoft will probably be forced to cover the losses with profits from other business units.

And losses there are. Microsoft barely got into the arena before coming face to face with price slashes from their competitors, forcing them to match price tags and take a hefty loss on every console sold. Contrary to what some analysts believe however, these losses don't spell doom for the company's foray into the console arena. The goal of the Xbox was to get a foot in the door of the industry, not the whole body. It's too early in the consoles life span to be predicting failure. Microsoft apparently is willing to go the distance, recently announcing plans to pump two billion dollars over the next five years into their on-line service.

All three console providers also have competition in the form of PC on-line gaming. A recent collaborative survey between Valve and Speakeasy is a testament to the fact that broadband is in part driven by gamers, with over 77 percent of surveyed gamers owning a broadband connection. Console makers may find this PC gaming contingent to be a difficult sell on the idea that a console can offer them something they've already been enjoying for several years.

With the recent flurry of price cuts, early statistics show an 800 percent jump in PS2 purchases, a number analysts believe Microsoft and Nintendo will see to some degree as well. The push to have a broadband gaming solution in every home is just beginning, with companies jostling for position in your living room. The current generation of consoles are laying down a framework that very well may dictate the future of home entertainment. As gaming consoles bleed into the set-top box market, expect one of these three companies to control your living room somewhere down the line.