Why is this man smiling? What? He's worth $90 million? Oh, that explains it.

Traditionally a gaming-news dead zone, the third quarter was brimming with revelations this year. Major headlines emerged right out of the gate, with the merger of Activision and Vivendi Games being finalized on July 10. The result was Activision Blizzard, the biggest third-party publisher, with $1 billion in Guitar Hero and World of Warcraft driving revenues each quarter. Though fantastic for CEO Bobby Kotick, whose stock options were worth nearly $90 million after the deal closed, the merger saw many former Vivendi developers made redundant and a number of high-profile projects suddenly without a publisher. (Luckily, most found homes in the fourth quarter.)

For the second year in a row, the E3 Media & Business Summit was held in July, drawing together much of the world's game-industry glitterati, illuminati, and paparazzi. Unlike last year's poorly received Santa Monica excursion, 2008's event returned to the downtown Los Angeles Convention Center, where about 5,000 people congregated at the exact spot that attracted 60,000 two years before. The venue underlined the contrast between this year's modest show floor and the Technicolor spectacle of years past, leading event organizers at the Entertainment Software Association to supersize their plans for E3 2009.

Nintendo @ E3 2008

Reggie & Co. tout their wares--and riches!

Though exhibitors would openly lambast the proceedings after they were over, E3 2008 still saw plenty of headlines. Even before the Big Three's preshow press conferences, word of Halo 3: Recon and a 60GB Xbox 360 leaked out. Microsoft quickly followed up with two widely rumored announcements--Netflix streaming and the Avatar-based New Xbox Experience--and one out-of-nowhere shocker, Final Fantasy XIII for the 360. Nintendo's presentation was heavy on financial swaggering and light on new announcements other than Animal Crossing: City Folk, Wii Sports Resort, the first Grand Theft Auto DS game, and the Wii Motion Plus. Indeed, the event will be likely best remembered for its finale, a public mangling of the Super Mario Bros. theme via Wii Music that presaged the game's tepid reception later in the year.

Finally, Sony used its event to officially unveil God of War III, the 256-player shooter MAG, and Resistance for the PSP. With an adorable Little Big Planet level standing in for PowerPoint, Sony Computer Entertainment America president Jack Tretton announced the launch of the PlayStation 3's long-awaited video store, and also revealed that the 80GB model of the console would replace the 40GB version at the $399 price point. What Sony didn't mention was that the 80GB PS3 has zero backward compatibility with PlayStation 2 games--a feature that Sony had heavily touted in the past.

Microsoft @ E3 2008

Avatars, Netflix, and the 360 FFXIII-athon

Third parties didn't sit on their laurels at E3. Though it didn't officially participate in the event, Activision held a conference-party down the street, where it pulled the curtain back on Singularity and the new Wolfenstein. Take-Two Interactive showed off Gearbox Software's upcoming sci-fi action RPG Borderlands, and Ubisoft touted I Am Alive. However, it was Electronic Arts that made the biggest headlines with two BioWare-related revelations: Namely, that Dragon Age was coming to consoles, and that the Canadian studio's massively multiplayer project was set in the Star Wars: Knights of the Old Republic universe.

Indeed, EA continued to dominate the news cycle during the third quarter. After shocking the industry at E3 by revealing that it--not Activision--would publish id Software's new postapocalyptic actioner Rage, the Redwood City, California-based company inked several more high-profile deals under its EA Partners program. In August, it announced plans to distribute upcoming games from Epic Games' Polish subsidiary People Can Fly and No More Heroes maker Grasshopper Manufacture, the first Japanese shop to sign on with EA. In September, EA subsidiary Mythic Entertainment's long-in-development massively multiplayer online role-playing game Warhammer Online: Age of Reckoning finally launched, and it amassed more than 800,000 subscribers in less than two months.

Sony @ E3 2008

SCEA prez Jack Tretton gets some presentation help from Sackboy.

Unfortunately for EA CEO John Riccitiello, the quarter ended with his attempt to take over Take-Two Interactive finally fizzling out after nearly seven months of deadline extensions. However, he wasn't alone. During the last week of August, Square Enix CEO Yoichi Wada launched a $200 million bid to subsume Tecmo, only to have the troubled Ninja Gaiden maker opt for a union with Dynasty Warriors factory Koei instead. Nevertheless, not all acquisitions short-circuited. After several months in limbo following Perpetual Entertainment's demise, Star Trek Online was beamed up by City of Heroes developer Cryptic Studios--which itself would be assimilated less than four months later.