THE GAMES PEOPLE PLAY; VIDEO DIVERSIONS GRAB CENTER STAGE AS ENTERTAINMENT.

Byline: David Bloom Daily News Staff Writer

Feeling a little playful this week? It might be that spring weather. But it also might be the tens of thousands of game-playing freaks - OK, computer and videogame designers, developers, publishers, retailers and others - descending on our fair burg for the first time in three years, for the Electronic Entertainment Expo.

E3, as the massive trade show is known, is devoted to the computer and videogame industry and runs Thursday through Saturday at the Los Angeles Convention Center.

The show's participants are arriving in town to show off the latest technology and coolest games, previewing much of what should dominate this Christmas season, and to celebrate an industry growing so fast it soon will outstrip the movie business's domestic box office.

Last year, an estimated $6.3 billion in video and electronic games were sold, just a few hundred million dollars behind what the movies earned at theaters (though the rental business about doubles Hollywood's movie take).

And increasingly, the differences between games and movies are shrinking, as studios option games to make movies, and game publishers license movies to create new titles, and technology allows everyone to go digital and interactive and cinematic.

Given the boom times, E3 promises to be a major spectacle as it returns to Los Angeles after a two-year stint in Atlanta's commodious but inconvenient convention center.

With Los Angeles' meeting space whipped into shape, and a huge proportion of the gaming business and the rest of the converging entertainment industry headquartered somewhere along the West Coast, it was time to come back to L.A., said Doug Lowenstein, president of the Interactive Digital Software Association.

The result is, to borrow from Ed Sullivan, a really big show.

It is possible that some portion of the convention center is going unused by the 410 companies with E3 booths - in some cases, they might better be described as E3 estates - but it's unlikely.

In all, more than 543,000 square feet of space will be used, and perhaps 50,000 people will attend the show, which is closed to the public, said Lowenstein. Sony alone will have a 40,000-square-foot booth, with hundreds of employees, company officials said.

And the stars of this really big show?

Aside from the busty hostesses, fake-fur-clad mascots, gimmicky giveaways and overwrought displays, it'll likely be Dreamcast, the next-generation gaming console from Sega.

The Dreamcast - released last winter in Japan and debuting here in September - is the first console to use 128-bit computer chips to generate increasingly realistic graphics.

That means at least double the power of the 64-bit Nintendo 64 and Sega Saturn, and far more than the 32-bit Sony PlayStation. After the Saturn's failure to excite the market, Sega is betting big on the Dreamcast to revive its gaming fortunes, spending an estimated $500 million worldwide to market the machine this year.

And the Dreamcast has a lot to offer. It will seem a lot more like a computer than a game box, coming as it does with a built-in modem, 3-D graphics accelerator, connections for printers or keyboards and a Windows CE operating system courtesy of Microsoft.

The big difference? Its specialized brain and high-powered graphics chips allow it to run games at four times the rate of a Pentium II computer. That's the virtue of being a box designed for the peculiar, graphics-heavy demands of games, instead of a generalist machine that needs to handle a variety of tasks.

``This one just has that much more power, certainly more than any current PC,'' said Gregory Fischbach, CEO and president of Acclaim, one of the biggest console gamemakers, with two titles being created now for Dreamcast.

Given that power, demonstrations of the new console's first titles have been quite alluring to jaded old gamers.

Sonic Adventure, featuring Sega's blue hedgehog mascot, is so fluid that it's almost too fast.

A football title, NFL 2000, shows facial expressions and the breath steaming off players during late-season games in northern cities.

And Shenmue, a soon-to-be-released action adventure, looks stunningly cinematic, with protagonists and backgrounds that veer ever more unnervingly toward looking real.

``We thought only the PC could do this, and it's not true,'' said Jennifer Pahlka, director of the Game Developers Conference, where the Dreamcast and its competitors recently were shown off. ``There's going to be a whole bunch of platforms coming out to challenge the PC.''

Those other platforms include Nintendo, which is expected to announce its own next-generation machine soon, with a rollout probably in 2001, said Christian Svensson, editor in chief of MCV, a trade publication specializing in gaming.

For E3, however, expect Nintendo to show off its new ``Star Wars'' title - which allows a player to take part in the ``Ben-Hur''-like rocket pod races that provide a climactic scene in the movie - and other games that should keep the money flowing in.

Another competitor is VM Labs, whose Nuon graphics chip gives gaming capabilities to regular electronics devices such as DVD players and cable set-top boxes, without adding more than a few dollars to the cost. It's designed to create a new outlet for electronics owners who want to occasionally play games, Svensson said.

But looming over everything is Sony, whose PlayStation is the most successful gaming console ever made, with one in 19 million American households, nearly a fifth of the U.S. population. That massive market has led game developers to create nearly 600 titles for the platform, far more than any competitor.

But Sega isn't worried about Sony's current success, which it would like to emulate. Its much bigger concern, despite the Dreamcast's impressive-looking technology and the PlayStation's aging innards, is another 128-bit machine that won't even be shown publicly at E3, Sony's PlayStation 2.

``I was very impressed,'' said Pahlka, who saw an early version of the PlayStation 2 at the Game Developers Conference. ``I think the crowd was very impressed. There was a real sense in the room of this being an impressive machine.''

Despite the PlayStation 2 buzz, however, Sony officials said they'll spend this E3 on the machine they already have on the market.

``We're focused on the current PlayStation, and the wealth of new software we'll be coming out with,'' said Kazuo Hirai, president and CEO of Sony Computer Entertainment America.

In all, the company will be showing off nearly three dozen titles coming from it and corporate sibling 989 Studios, including sequels to proven hits such as Spyro the Dragon, Crash Bandicoot and Gran Turismo, and a possible new contender, Ape Escape, Hirai said.

``As for this year, the PlayStation 2 won't be shown, they won't be talking about it,'' Svensson said. ``To be honest, it'll probably only be shown to developers they're trying to court. They probably won't even show it to press or analysts. Their emphasis is undercover this year.''

CAPTION(S):

3 Photos

Photo: (1--Cover--Color) POWER PLAY

Next generation of video games revs up

Cover design by Lori Valesko/Daily News

(2) Sonic Adventure, with Sega's blue hedgehog mascot, is so fluid that it's almost too fast.

(3) Everquest comes with some steep requirements - an accelerator card and a monthly subscription fee - but also delivers a lot of bang for your fantasy-playing buck.