SOFTWARE EXPO OUTGROWS L.A. DIGS : CRUNCH LEAVES 200 EXHIBITORS IN THE COLD.

Byline: Russ Britt Daily News Staff Writer

In one short year, the Electronic Entertainment Expo has become big. So big, in fact, that it has outgrown Los Angeles.

The show's sponsors are taking up 35 percent more floor space - filling the Los Angeles Convention Center to overflowing - and have been forced to turn away 200 potential exhibitors wanting to set up booths at the show. It will run Thursday through May 19 at the convention center.

Indicative of the rapidly growing computer industry, the conference known as E3 has become the most prestigious software trade show in only its second year.

``It is for us the one important trade show of the year,'' said Steve Dauterman, director of production for Lucas Arts Entertainment Co. in San Rafael, one of the more prominent computer game makers. ``It's surprising and frightening at the same time.''

The show's growth has been so rapid that the exhibition is planning to move to Atlanta, where it will have use of a larger convention hall, plus the Georgia Dome, home of the Atlanta Falcons professional football team.

Los Angeles simply cannot accommodate E3 anymore, said Doug Lowenstein, president of the International Digital Software Association, which sponsors the gathering.

``It's predominantly a space issue,'' Lowenstein said. ``L.A.'s been a great city. It's a great host. Given everything, I think we would have preferred to stay in L.A.''

E3 was born because the Consumer Electronics Show, which previously was the showcase for new software, displayed a variety of products. Software makers felt they deserved an exposition of their own.

This year's exhibition will add 1,700 new titles. A total of 400 companies will be at E3, up from about 350 last year, but many are taking on much more space, Lowenstein said.

Now the question is will there be enough room on store shelves for all the new products making their debut?

``No,'' said Roxanne Koepsell, vice president of merchandising for the Neostar Retail Group, parent of the Software Etc. retail chain. ``I think there is the challenge of trying to get the shelf space first of all, and there is the challenge to be unique enough as a game.''

Koepsell said Software Etc., which has 850 stores throughout the United States, Canada and Puerto Rico, is limited to roughly 800 to 1,000 games that it can absorb on its shelves. The chain now is more selective on the titles it decides to sell because of the high proliferation of products, she said.

``There's always room for the good titles,'' she said. ``I would have to say there's not enough room for all of them.''

Jon Van Caneghem, president of New World Computing, a small adventure game maker in Agoura Hills, said few of the new titles will stand out.

``They all won't sell. Ninety-eight percent of them can't make a profit,'' he said. ``There's a lot of people going to be disappointed in their sales.''

Still, software makers are flocking to Los Angeles and have been setting up booths throughout the convention center's 715,000 square feet of space since May 5. It will take them five more days after the show concludes to break down their equipment and cart it out.

Dick Walsh, the convention center's general manager, said the preparation time is unheard of for conferences. The normal setup time for three-day trade shows is two days, followed by one day of breaking it down.

``It's not just pipes and drape. It's far from it,'' Walsh said.

Walsh said more than 1,350 phone and data lines are being installed for the show, far more than ever were installed for last month's cable show.

That conference set a record with 900 phone lines.

With the vast number of software titles making their debut, it is difficult to differentiate which will stand out from the crowd, analysts said. In fact, the greatest hoopla surrounds hardware, not software.

One anticipated debut is that of Nintendo's new N64, a game machine designed to rival the Sony Playstation and the Sega Saturn. At last year's show, the Playstation and Saturn staged a highly publicized premiere and dueled it out. Sony's product got the upper hand quickly.

Another is whether game players' tastes have become so sophisticated that new platforms may be necessary, namely in on-line games.

On-line games present a significant advantage for consumers because they can play opponents at other locations via the Internet or other networking tools.

Five percent of the products premiering at the show will be devoted to on-line games, and major and minor software makers are gearing up to start developing new products.

Software makers do not see on-line gaming as a threat to their business, rather they view it as an additional platform to sell their wares. Hope Neiman, vice president of Disney Interactive Entertainment, said it will take several years for modems and phone lines to transmit the vast amount of data contained in today's CD-ROM games.

``You're trying to send a little trickle, and what you need is a big water blast,'' Neiman said.