Sony Worldwide Studios exec Michael Denny has warned that the games industry must be prepared to make huge changes as the digital era gets underway.

Speaking at the London Games Summit this afternoon, Denny described the industry as being "at a crossroads", with many people "undecided, perhaps even divided" over what the future holds.

He argued that the current console transition is taking place in a world very different from that of five or six years ago, before the arrival of the iPod and websites such as YouTube and My Space.

"Consumers have more choice, want better things and have louder voices," Denny said.

He went on to discuss the importance of user-created content and to observe that niche products will become more popular as distribution models change, stating, "The hit driven market will continue, but hits must compete with niche products... The era of one size fits all is ending."

According to Denny, the move into a new era will require "the most fundamental shift in planning, content creation and management that our industry has ever seen".

He described downloadable content as one of the "biggest weapons" developers and publishers have at their disposal, arguing that it can and should be used to "complement retail launches, encourage consumer loyalty and extend products' life cycle, helping to prevent trade-ins".

Sony's e-distribution initiative, which was first announced at this year's Develop conference, has been met with an "overwhelming" response from developers, according to Denny. He added that many studios are also highly enthusiastic about the possibilities opened up by the PS3's tilt controller and built-in hard drive. ...

Speaking exclusively to GamesIndustry.biz Sony Europe has categorically denied reports that the PS3 hardware has suffered any problems due to overheating.

The rebuttal follows a report by Macquire Securities analyst David Gibson, who wrote that PS3 units at the Tokyo Game Show were overheating, causing concern over the stability of the console, which in turn caused Sony shares to tumble by 2.75 per cent yesterday.

"SCE can categorically deny that there's any problems with PS3 units overheating," said the company in a statement issued to GI.biz.

"As could be seen on the TGS floor by the tens of thousands of media and public attendees, both the hardware and software worked flawlessly," the statement concludes.

Sony has been suffering negative press since the company announced it would be delaying the European launch of the PlayStation 3 until March 2007, due to difficulties in producing a key component of the system.

The overheating rumours have also been fuelled by a recent recall of lithium ion batteries manufactured by Sony, which affected technology partners Dell, Toshiba and Apple. ...

Ahead of Friday's launch of the Xbox Live Vision Camera, developer Strange Flavour has revealed it is already working on two more titles to take advantage of the new 360 peripheral.

Strange Flavour's first title, TotemBall, is currently available to download free over Xbox Live Arcade, with map packs and other content due in the near future.

Other titles supporting the camera include UNO, which is provided free with the peripheral, World Series Poker from Activision, Ubisoft's Rainbow Six: Vegas and Texas Hold 'Em, which is expected to receive an auto-update within weeks.

Speaking at a launch event in Central London this morning, Microsoft revealed that other publishers are currently considering how to make use of the camera, with EA Sports said to be "thinking about it."

One thing that isn't being planned at the moment is cross-platform chats between Microsoft Windows and Xbox 360 users, despite the fact that the camera itself works with Windows as a simple USB webcam.

The Xbox Live Vision camera is available from Friday priced GBP 34.99 and comes with an Xbox Live headset, a copy of UNO and one month free Xbox Live Gold access. ...

LucasArts' Chris Williams has declared that next-gen gaming is about more than "pretty graphics" - conceding that games have yet to reach the level of movies when it comes to visuals.

Williams, who is project lead on LucasArts' new Indiana Jones game, made his comments in a speech at GDC London this morning. He talked extensively about the studio's relationships with sister company Industrial Light & Magic, observing, "Film and game technology really compliment each other."

However, he went on, game developers still have "a lot to learn from film". As an example, he cited the CGI character Davy Jones from Pirates of the Caribbean 2. According to Williams, it's highly unlikely that such a high level of character detail could be recreated in a game "for next-gen, or even the generation after that".

For LucasArts, he continued, "Next-gen is not just about pretty graphics, and we're okay with that." Instead, the studio is looking for ways to change the gameplay experience - for example, by simulating instead of scripting characters.

To demonstrate this, Williams showed a level from the Xbox 360 version of the Indiana Jones game. He highlighted the many different and unpredictable ways enemies will fall when hit, or grab out for something to hold onto when falling.

"There are different payoffs for every action in the game," Williams explained, adding, "When you are creating these moments that are truly your own, you are telling your own story."

Williams then demonstrated some impressive physics effects in a new, as yet unnamed Star Wars game from LucasArts. R2-D2 was shown being repeatedly thrown into planks of wood, which broke in realistic and different ways depending on their thickness, and a similar demo followed featuring the character of Jar Jar Binks encased in carbonite ("arguably where he belongs"). To conclude, Williams played a short video highlighting 'force power', which allows gamers to release bursts of power, pick up enemies and objects and slam them into walls.

According to Williams, LucasArts' "core underlying simulation technology, we think, is really going to change the way people play games". However, he continued, "We think this is just the tip of the iceberg." ...

The PAL delay of the PlayStation 3 could hurt revenues for publishers hoping to have taken advantage of a worldwide pre-Christmas launch of the console, with a potential 500,000 European gamers no longer viable consumers.

That's the opinion of UBS Investment Research analyst Michael Wallace, who also noted that the situation may prompt some publishers to delay the launch of their titles to take advantage of a larger market when the PS3 launches in March.

Wallace had expected Europe to receive 500,000 console units by Christmas, and noted that large publishers such as Activision may suffer from building their Q4 targets around the launch of the PlayStation 3.

Publishers that have hedged their bets with titles across multiple formats, including Nintendo's Wii, had a better chance of making up losses, said Wallace.

Shares in Sony fell yesterday by 2.75 per cent after another analyst, from Macquire Equities, issued a statement of concern about the PlayStation 3 units at this years' Tokyo Game Show which suffered from overheating problems.

"We are concerned that such a problem has occurred so close to full production and is clearly negative news for the company," said the firm.

Sony spokesperson Nanako Kato has since clarified the company's position to the Associated Press, stating that 200 units grouped closely together with little ventilation had caused the problems, and not any manufacturing fault.

"It's not a problem with the PlayStation 3 unit itself. For a normal player at home, there shouldn't be any problem," he said.

Yesterday investment firm Goldman Sachs lowered Sony's stock rating from 'buy' to 'neutral', amid concerns of disappointing PSP sales and confusion over the launch of the PlayStation 3. ...

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The DS has a new fastest selling game, and not surprisingly, it begins with a Poke. Pokemon Diamond & Pearl sold 1,586,360 units in its first four days of sales over in Japan, sales tracker Enterbrain reported today. This demolishes the previous record holder, New Super Mario Bros., which managed 865,024 units in its first week.



In case there was any concern about Pokemon's popularity being on the wane, here's another stat for you. Enterbrain's sales figures make Diamond & Pearl the fastest selling Pokemon title ever, topping Gold & Silver, which sold 1,425,768 units in its first week in 1999.

A separate sales tracking service, Media Create, has provided stats on the individual versions of the game. Diamond was apparently the more popular of the two, with 813,237 units sold, compared to Pearl's 762,029 units. The total doesn't match the Enterbrain figure, but this is usual for the different sales tracking data.

Diamond & Pearl will hit American in 2007, and is expected to see similar success at retail. ...

Ignition Entertainment sent along word today that Mercury Meltdown -- the sequel to Mercury, the PSP's first liquid blob puzzle game -- is now shipping in North America, offering more than 160 new puzzles.

Mercury Meltdown features a new visual style, doubles the number of stages, adds a free-look camera, and offers new ways to control your mercury blob. Mercury Meltdown also offers two-player games, party games, game sharing, custom skins and downloadable content.

Via IGN ...