[In a GameSetWatch-exclusive set of blog posts for the week of GDC 2010, Magical Wasteland blogger and Game Developer magazine columnist Matthew Burns continues his journey through the show. Previously: Part 1 and Part 2.]

People are getting used to the fragmented chatter, refining their personal stories and business pitches down to the fewest succinct words, skipping past pleasantries and context-setting. Some stand in line listlessly, murmuring about being hung over and needing sleep, only to spring into manic animation when they see someone they know or want to speak to in the crowd.

In the morning I have a series of long, wide-ranging and interesting one-on-one conversations. Nels Anderson of Hothead Games discusses team structure, management and technology. Kevin Gadd of Arena.net chats about Asian MMOs versus Western ones, and we segue from there into an appreciation for the unusual development of the American-made Square game Secret of Evermore, bringing it right back around to his current project Guild Wars 2 by mentioning Jeremy Soule, the composer of both. Robert Alvarez of Joymax tells me about the ins and outs of free to play communities.

The fact that tens of thousands of game developers have descended on downtown San Francisco is not lost on its local residents. As I’m walking on Market Street a woman notices my badge and approaches me. “You make games?” she says. I nod, leery that I may be getting a sales pitch.

But she just wants to talk. “What kind of games you make?” I used to make big budget, complex games, but I left recently to make smaller, simpler ones– “So I like the smaller simpler games,” she says, “And y’all should make more of those. I can’t play that crazy new stuff you guys put out with all the nonsense in it. I want more games like Mario Brothers. You know what I mean?” I tell her I totally know what she means, and she laughs and shoos me on.

Later in the day I meet with some developers from Japan. How is business?, I ask. In so many words, they say business is pretty goddamn terrible, and their stoic, resigned gloom is a sobering counterpoint to the exuberance on display elsewhere at the show.

Japan’s domestic market is shrinking along with its population and the Western market largely continues to elude while rivals with vastly lower operating costs pop up all over Asia. I express worry about the companies with their newly concatenated names: Namco Bandai, Tecmo Koei. Are they really going to be okay like this? Are they going to stay relevant? They shrug opaquely: we don’t know.

The theme of decline feels reinforced later when I stop by the former “Sony Metreon,” now just the Metreon. This claustrophobic shopping mall feels like a tombstone of sorts to Sony’s global, industry-crossing mindset in the 1990s when its influence was at its zenith. Back then the PlayStation was the unquestioned top video game platform and brand, Sony Pictures was going to integrate, somehow, with their electronics, and everything seemed set for the grand networked entertainment convergence to be a heavily Sony-centric affair.

Today, however, the Metreon consists of unhappy corridors that lead nowhere, full of metal caging where stores ought to be (among the recently absent: the long-suffering Sony Style boutique). Its ignominious capstone is the defunct “Walk of Game,” a self-conscious but un-ironic aping of Hollywood’s Walk of Fame minus the outdoors and any semblance of import.

There, one can walk on top of metal plates that read “Halo,” or “Lara Croft,” or, in a particularly poorly lit cranny near an electrical closet, “Shigeru Miyamoto,” all of them with a URL in the corner– walkofgame.com– that when entered into a browser unceremoniously redirects the user to a generic page about the shops and restaurants of the Metreon by the international property management firm that now owns and runs it. No information on what these “stars” are, or mean, or why they pointlessly dot the floor inside this nondescript urban shopping center is given.

As the evening begins I wind up in a hotel bar with about a dozen Infinity Ward employees, representing their studio in force with their logo jackets and t-shirts. My curiosity gets the better of my restraint and I say, “So, how’s work?” Fine, they answer, smiling– really just fine.

One of the group there is Mohammad Alavi, a longtime employee and the designer of Modern Warfare 2’s infamous “No Russian” level; I ask about his goal in creating that mission. He gives me an answer and then tells me not to publish it. Too bad. It was a good one.