Every year the game industry takes over the national stage for E3, the biggest gaming convention in the U.S. And while E3 may not be the gargantuan 80,000 person festival it used to be, this year's 4,000 person E3 Media and Business Summit still had a festive atmosphere, including a killer party where The Who rocked out in honor of Rock Band 2. Still, the focus of E3 has undoubtedly shifted away from the unimpressive show floor (which one Ubisoft executive compared to a "pipe-fitters convention") and moved toward the Big 3 press conferences from Sony, Microsoft and Nintendo. Here's my insider's take on what each of the Big 3 companies presented to the world's press.

Sword-fighting is part of Wii Sports Resort, due in Spring 2009.

Sony's Jack Tretton on stage announcing God of War III.

Microsoft unveiled a brand new dashboard interface, due this fall.

MICROSOFT

Microsoft kicked off the week with the first media briefing, held at the LA Convention Center that was also home to the E3 show floor. While rumors swirled about Microsoft introducing a motion controller for the 360, it was nowhere to be seen. Instead, Microsoft's Don Mattrick jockeyed between showing off big upcoming games for the hardcore and also trying to push Xbox 360 as a more casual, mainstream platform. Given that the 360 is currently third on the sales charts in the U.S. (although about 4 million units ahead of PS3 to date) the pressure was on Microsoft to wow the crowd.

Microsoft did just that with a couple key demos including Resident Evil 5, which is coming out in March, 2009. Bethesda's epic RPG Fallout 3 was also demonstrated live for the first time with the game's innovative V.A.T.S. combat system. V.A.T.S. lets you pause the action and specifically target enemy body parts. While both demos looked good, you'll see Fallout 3 and Resident Evil 5 on the PS3 as well. The one game you won't see on PS3 is Gears of War 2. The E3 demo blew away everyone in the audience. Design director Cliff Bleszinski revealed a new campaign level that focused on huge-scale combat. Cliff also hinted that players will be able to ride the monstrous Brumaks when the game comes out on November 7!

In addition, Microsoft revealed more mainstream games such as Lips (a karaoke game from Inis, the creators of Elite Beat Agents), and the Xbox Live Vision Cam-based You're In The Movies. But perhaps the biggest announcement was the November launch of the "New Xbox Experience." This fall, your Xbox Live Dashboard will be completely overhauled in this free firmware update which also adds features like a photo-sharing mode and yes, 3D avatars. Long-time 360 gamers will no doubt agree that finding demos and downloadable content is a challenge with the current dashboard interface, so the New Xbox Experience will be a welcome upgrade this fall.

Overall, Microsoft presented a solid briefing but it lacked any real surprises, besides the announcement that Final Fantasy XIII will be coming to the Xbox 360 on the same date as the PS3 in North America and Europe. This is a huge loss for Sony as Final Fantasy has always been a PlayStation exclusive. It's also fair to point out that some games were noticeably absent, including any news on the future of Halo, Alan Wake (from Remedy, the creators of Max Payne), and any first-party games due in 2009 and beyond.

NINTENDO

Nintendo always has a knack for starting their E3 briefing early in the morning, and this year was no different. It began at 9 a.m. at the legendary Kodak Theater when Nintendo's Cammie Dunaway arrived on stage to debut Nintendo's latest slogan: "We make you smile." Nintendo is certainly smiling as the Wii and DS continue to dominate the sales charts, often outselling the competition by a factor of four to one. So how does Nintendo plan to stay ahead of the competition? It all boils down to a new attachment for the Wii Remote called Motion Plus. This tiny addition at the bottom of the Wii Remote adds true 3D sensing to the controller, allowing players to tilt and pivot like never before with true one-to-one motion correspondence. Of course Nintendo never debuts new hardware without software to demonstrate it - that's where Wii Sports Resort comes into the picture. Scheduled for release next spring alongside Motion Plus, you'll get to experience new games such as Jet Skiing, Frisbee Throwing and Sword Fighting. There are still two other mystery sports to be revealed as well.

Shigeru Miyamoto was onstage to unveil his newest creation, Wii Music, which is more of a musical toy than a game. Whereas Guitar Hero and Rock Band are focused on skill, Wii Music is more about experimentation. You pick different instruments (such as a flute, or steel drums, or a guitar) and play through classic songs like Yankee Doodle and Twinkle, Twinkle Little Star. The experience feels like playing an electric keyboard in a music store. While I have to admit I came away from the experience a bit skeptical, I can see how Wii Music will appeal to younger players and mainstream consumers who find Guitar Hero and Rock Band too difficult.

Otherwise, the Nintendo briefing was relatively light on news for hardcore gamers, besides the announcement of Animal Crossing: City Folk, which will ship for the holidays. There is also an optional hardware accessory called the Wii Speak, which will allow players to chat online with each other. Animal Crossing aside, hardcore gamers and die-hard Nintendo fans seemed disappointed with the briefing because Nintendo did not announce any big new games. Nintendo president Satoru Iwata did explain that the Mario and Zelda teams will release new Wii titles in the coming years. Until then gamers will have to settle for previously announced titles like the platformer Wario Land: Shake It, Mario Super Sluggers, and third party releases including Call of Duty: World at War and Shaun White Snowboarding.

When it comes down to it Nintendo was the company that needed to prove the least at E3: They are on top and their strategy is working. So, while the briefing lacked big game release news to excite the core gamer, Nintendo will likely still top the charts and appeal to a whole new audience with Wii Music this holiday season.

SONY

Shortly after Nintendo's briefing ended, Sony put on its show at the Shrine Auditorium in downtown Los Angeles. Hosted entirely by SCEA CEO Jack Tretton, Sony spent most of its briefing on new games for 2008 and beyond, and also discussed the PlayStation Network platform. Sony has struggled over the past couple years with the PS3, which still sits in third place overall. But during the past few months, sales have improved in a big way: In June the PS3 nearly doubled the sales of the 360, in no small part thanks to the launch of Metal Gear Solid 4.

When it comes to games, the PS3 briefing presented an impressive lineup. The problem? We've been hearing about most of these big games for years. The visuals in Killzone 2 look phenomenal and I can't wait to play it. But it won't be out until early 2009 - and already we've been talking about it for close to four years. The same goes for the creative LittleBigPlanet, which I think could be a huge breakout hit this fall. It could have stolen more E3 headlines but this is now its second E3. So it's a good thing that Sony did have Resistance 2 to roll out at E3. Insomniac president Ted Price debuted a boss fight set 1950s Chicago against the Leviathan, a huge 300-foot creature. Resistance 2 is perhaps the most ambitious PS3 game to date with a full single-player campaign, a co-op campaign, and countless multiplayer modes.

In terms of other announcements, Sony revealed its long-awaited (and long-delayed) video store to buy movies and TV shows over the PlayStation Network. And new PSN games such as Flower (from the creators of Flow) and the multiplayer slaughter-fest Fat Princess (my pick for best game name of the show) both impressed me. Sony even had a few announcements to excite hardcore gamers in a year without many E3 surprises: A teaser trailer for God of War III, and the reveal trailer for M.A.G. (Massive Action Game) from Zipper, a 256-player online experience from the creators of SOCOM. Unfortunately, though, both reveals were nothing more than computer-generated trailers without real gameplay - which brought back memories of the Killzone 2 computer-generated piece from 2005.

In short, Sony's conference lacked any big news, but it did feature a good slate of exclusive games for the PS3 this holiday season and into early 2009. Sony has struggled so far with the PS3, but the E3 press conference showed that there is still a lot of life left in the platform and the PS3 will be fighting hard against the 360 this holiday season.

That's it for my E3 report, but I'll be back next month with an inside look at one of the top third-party publishers, Electronic Arts, and its annual "Studio Showcase" event in San Francisco.