The big names in the video games business are gearing up to do battle in Los Angeles at one of the most spectacular trade shows in the world.

Tens of thousands of people are expected to descend on the city for the Electronic Entertainment Expo, E3, which runs from 18 to 20 May.

This year Microsoft, Sony and Nintendo are all due to reveal details about the next wave of video game consoles.

The machines are expected to hit the shops over the next year and a half.

Loud and flashy

They will be the first new gaming machines since 2001 and they will herald in a new generation of consoles.

With faster chips and better graphics, the machines have the potential to make games more realistic and involving.

Microsoft pre-empted E3 by launching its bid to dominate gaming in the living room last week. It unveiled its next generation machine, the Xbox 360, in a star-packed show on MTV.

Traditionally, big announcements like this are made at E3, and game enthusiasts are waiting to see what Sony and Nintendo come up with.

The event also offers a showcase for games being released over the coming months, with 400 exhibitors from 80 countries.

Behind the brash sounds and flashy lights of E3, video games are a serious business. The global games market is worth some $28bn (£14.5bn).

Last year Americans spent $7.3bn (£3.94bn) buying 248 million computer and video games. In the UK, gamers spent £1.22bn on software and hardware in 2004.

"It's been a long time since there has been so much life in the industry," said Margaret Robertson, games editor of Edge magazine.

Three-way fight

Microsoft kicked off the console frenzy last week, when it lifted the lid on its Xbox successor.

Called the Xbox 360, the curved, white console is much more powerful than its predecessor and is far more of an all-in-one entertainment system.

Microsoft plans to have the 360 in the shops by Christmas, well ahead of its rivals.

The price of the console is not known, but experts estimate it may be around the $300 (£162) mark in the US.

Both Sony and Nintendo are planning to showcase their next-generation games consoles next week at the E3, though they are not expected to go on sale until 2006.

Sony, in partnership with IBM and Toshiba, is developing something called the Cell processor which is said to be 10 times more powerful than the processors in today's PCs.

Like the 360, Sony's machine is expected to be able to serve as a digital entertainment centre in the living room.

By comparison, Nintendo says it is focusing solely on gaming. Little is known about its new hardware, codenamed Revolution, but it is expected to be similar in power to the 360.

Sony is the undisputed industry leader, having sold some 85 million PlayStation 2 consoles worldwide

Microsoft and Nintendo trail behind, each having sold more than 20 million Xbox and GameCube consoles.

Game on

Elsewhere the exhibit floor at E3 will showcase games coming from the big publishers such as Electronic Arts, jostling for space and attention against the smaller fry.

The show will offer players a first chance to try out next-generation games and see if they live up to the hype.

Nintendo's jewel in the crown is the new Legend of Zelda game that already has fans salivating.

And there will be a range of games based on films such as The Godfather, Jaws and the remake of King Kong.