The recession is forcing change on the once-invulnerable video game industry.

At E3, the issue of hard times has been utterly eschewed. And truly, it was difficult to think of any sort of recession in gaming when Paul McCartney and Ringo Starr took the stage to promote The Beatles Rock Band game at Microsoft's (MSFT) Monday press conference. After a minute or two onstage touting the game, the pair left. Then Steven Spielberg came to the stage to go gaga over Natal, an add-on camera for the Xbox 360 that, when released, will let players play soccer or racing games via body movements without a controller. Natal has been the show's big hit.

Later in the day, Electronic Arts (ERTS), which recently lost the No. 1 publisher spot to Activision/Blizzard, did their dog and pony show. This year, EA may take a hard hit with its giant Madden franchise, not only because the lunking but affable-sounding former coach has retired from TV. There's only so much innovation that you can inject into a decades-old franchise each year. Finally, Will Wright, the country's most visible and important game developer (who created the Sims and Spore series) left the company earlier this year.

Each year, press conferences by the Big Three—Microsoft, Nintendo, and Sony (SNE)—set the tone not only for the convention but for the rest of the year as a whole. But on Monday and Tuesday, everyone was glossing over the current state of the economy, avoiding the "R" word as if saying it might cause a panic like the overblown swine flu crisis has done. Nintendo, by far the No. 1 console and game maker, introduced new Mario and The Legend of Zelda games, along with an add-on for the Wii wireless remote to make game playing more precise. But there was nothing extraordinarily new: Nintendo, as top dog, doesn't need to do it.

Sony, which is suffering in third place, delayed Heavy Rain, a French-made serial killer mystery for the PS3 that plays like a movie. It boasts graphics that, for the first time, are truly filmlike and a story that has been touted as being close to literary. God of War III, its adventure series based loosely on the Greek myths, was delayed until 2010 as well.  Perhaps Sony's biggest blunder was releasing in the fall a follow-up to its handheld game console, the PSP. PSP Go won't use discs; it will mainly be used to download games from the PlayStation Network. It's a good idea, but at $250, is too pricey for this economy.

Only a few games each year combine creativity with popularity. Two years ago, it was BioShock, with an almost literary story based on the books of Ayn Rand. It may have been the best game ever made. Last year, it was Fallout 3, in which you carefully and wondrously explored a post-apocalyptic world in the way you admire "The Garden of Earthly Delights" at the Prado in Madrid. And, of course, there was Grand Theft Auto IV. Budgeted at $100 million (according to the Times online), it melded satire, Comedy Central-type writing, and requisite violence into a 100-hour experience no video game addict could refuse and no pop-art lover could pooh-pooh.

This year, there may be no must-have blockbuster. There is no Grand Theft Auto sequel. BioShock 2, while good, does not look as compelling as the original, perhaps because Ken Levine, the lead developer, decided against participating in the sequel. The Beatles Rock Band could sell millions, but the complete package at $250 will be too pricey for many in this economy. Most will settle for the standalone game.