One of the major competitive events in video gaming is coming to Seattle this summer.

Bellevue game giant Valve is holding a $1 million "Dota 2" tournament at Benaroya Hall over Labor Day weekend. The event coincides with the PAX gaming conference in Seattle.

Valve began the annual tournament last year with an event in Cologne, Germany, where 16 teams competed in a group-stage, double elimination playoff format for the $1 million prize. The runner-up team received $250,000.

Total payouts in the Seattle tournament will be at least $1.6 million, according to an interview Valve's Erik Johnson gave fan site joinDota.

"Dota" is a wildly successful, multiplayer, online fantasy game derived from "Warcraft III." Valve's now testing "Dota 2" and plans to release it for the PC later this year.

Details such as ticket information will be released in the coming weeks, Valve said in a brief news release.

Here's a Valve image of last year's winning team, from Ukraine:

To get an idea of what's involved, check out this video of last year's finals:

Mere mortals may consider trying for the $50,000 stuffed in a duffel bag - plus a custom Xbox - that GameStop is giving away to promote console shooter "Max Payne 3."

If Microsoft is ever going to have its Alec Baldwin moment, it will happen because of a home-brew game called "Wordament."

Baldwin was famously thrown off a plane in December because he wouldn't stop playing an addictive word game on his iPhone.

The actor was playing "Words With Friends," Zynga's Facebook version of Scrabble played by more than 8 million people a day.

So far the closest thing on the Windows Phone platform is "Wordament," an extracurricular project of two Microsoft employees that became a surprise hit after its debut last year.

The free, ad-supported app is a twist on the word-hunt board game "Boggle." You compete with players around the world in two-minute matches and work your way up leader boards.

It's still a pipsqueak in the broader world of mobile games, with hundreds of thousands of downloads since it appeared on Windows Phone in April 2011 and on Windows 8 last month. It has tens of thousands of unique visitors a day, with up to about 650 playing together at once.

But as one of the highest-rated, exclusive games on those platforms, it's positioned to lift off. It may even draw people to Microsoft's fledgling mobile devices, at least if they're "Boggle" fans.

The game was created as a side project by John Thornton, 37, and Jason Cahill, 38, who worked on the Windows Live photo team and had offices next to each other. They built the game after Microsoft began a "moonlighting" program in 2010, encouraging employees to build Windows Phone apps in their free time.

Thornton (left) began tinkering with word games and made a New Year's resolution in January 2011 to build an app a month. One was a prototype puzzle game he showed to Cahill and asked if he wanted to help. The answer was no, initially.

Cahill (right) and his wife were "Boggle" fans who played against each other wirelessly on Nintendo DS handhelds. The more he thought about the possibilities of a computer-generated game board connected via Internet services, the more excited he became about the project.

"I went home after telling him this whole lecture on how the way you get ahead at work is by doing work and not by doing moonlighting ... and ground all weekend,"Cahill said. "I came in Monday with a basic implementation of a service and a set of puzzles and I was like, 'OK, can I help on this half' ?"

This still cracks up Thornton.

"He must have coded the whole weekend after telling me no," he said. "It was kind of funny."

Thornton said the game's popularity sank in for him a few months later, at the Kirkland Fourth of July parade. Looking over the shoulders of a row of people in front of him, he noticed they were all playing the game.

Later that month, the Xbox Live group asked them to distribute "Wordament" through the game service. The Xbox group then hired them, where they're now the principals of a new studio expanding "Wordament" and developing new titles.

I heard about "Wordament" last year from a friend and fellow "Boggle" fan at Microsoft and was planning to write about the game after the Windows 8 preview version (left) was released in February. But I waited, partly because the game froze on a Samsung Windows 8 tablet I've been using. I wondered if the newsroom installed some kind of filter, because I'd spent so much time testing "Wordament" on the tablet.

Finally I got in touch with Cahill last week, and he explained that the Windows 8 version is a prototype and they're preparing a fix for the "suspend/resume" issue I encountered. Meanwhile, the trick to unfreezing it is the "downward swipe" gesture that closes and exits Metro-style apps.

The game can be played with a mouse but it works best with touch-screens, on which you mark words by sliding your finger across the letters. Speed and responsiveness are critical, so the game's a good way to sample the performance of a phone or tablet.

"Wordament" seems to be a game that Xbox Live could use to expand on platforms such as Apple's iPhone and iPad.

I wonder if "Wordament" will end up preloaded, alongside "Solitaire," on Windows Phones or Windows 8 tablets when they appear later this year.

The original goal with "Solitaire" on Windows was to teach people to use a computer mouse, so perhaps "Wordament" will help familiarize people with the new Windows 8 touch gestures.

That would propel the game into the "Words With Friends" league.

It could also offset productivity gains promised by the new software, though, and potentially cause problems for Alec Baldwin types.

Lots of feedback was generated by Monday's column on Facebook's Jocelyn Goldfein and encouraging women to study computer science.

Goldfein mentioned that when she was a young girl, her grandmother introduced her to logic games.

One reader asked what sort of games Goldfein would recommend for kids, because he'd like to encourage his daughter and nieces to consider computer science.

I passed the question along to Goldfein, who said a childhood education expert is probably the best person to ask. But she provided an "anecdotal" answer and listed a few games that her daughters play.

The logic puzzles my grandma did were very old-fashioned, kind of like this: http://www.logic-puzzles.org/

The modern-day equivalent is undoubtedly Sudoku (and in fact I'm an avid Sudoku'er and my daughter at age 6 started enjoying Sudoku herself).

But my broader answer is that it's not the puzzles themselves that matter. You can't toss a book of kids Sudoku puzzles at a 6-year-old and expect her to be interested. My daughter was interested *because* she saw me with my nose in a Sudoku book all the time. So the best games and puzzles to encourage are either ones you do yourself, or better yet, ones you will do with her. That can start with card games like Go Fish and Uno. Anything with sorting and matching and counting is great foundations for logical reasoning.

There are lots of great counting and sorting oriented board games, and then you know, we live in a golden age of casual video games for kids. There are so many wonderful smartphone apps and Web apps. My kids play a ton of them, from overtly education oriented ones (like Zoodles) to simple strategy games like Glitch or Pocket Frogs or Gaia -- which actually require a lot of counting and logical reasoning skills, and have cute graphics and addictive game mechanics. Even more importantly, they are games the adults in their lives are interested in playing with them!

My bottom line is the best game is one that you're going to do with her, and not its raw educational content. I do think parental investment and modeling is the biggest factor of all. (Plus, and you may have seen this covered elsewhere, but all the good research findings we're getting now about how we need to praise our kids for effort and not traits.)

I also posed the question to Douglas Clements, a distinguished professor at the University at Buffalo, State University of New York, who has written 18 books and hundreds of publications on early childhood education, math education and related topics.

Clements said that it's a huge question. Lots of games have a variety of math and logic skills, and a myriad of factors pique people's interest.

"Still, games are very good ... from board games that build intuitions about number and probability (see our Building Blocks software) to logic games such as Dienes' attribute games... which are excellent, to the old Learning Co. computer games (see the Logical Journey of the Zoombinis computer challenges too) to Logo.

And there is perhaps nothing better for computer programming... than ... computer programming!"

Any other suggestions?

Microsoft is resurrecting one of its oldest franchises, "Flight Simulator," with an entirely new game called "Microsoft Flight" that's debuting on Feb. 29.

But instead of a new installment of the hyper-realistic, encyclopedic simulator that mostly appealed to flight enthusiasts, Microsoft built a smaller, more accessible game that's going to be offered online for free.

Planes can be flown simply by moving a mouse around, though enthusiasts can also use more realistic and complex controls.

It's also a new business direction for Microsoft's PC game business, which is using "Flight" to experiment with free online games monetized through microtransactions. About 80 percent of U.S. gamers now play such titles, mostly through Facebook, where players spend an average of $29 per month, according to Parks Associates research.

To start, the game will let people fly around Hawaii - the Big Island - in planes including a Boeing Stearman similar to one displayed at the Museum of Flight. For $20 players can get seven additional islands, new missions and an additional plane.

Microsoft will periodically offer new territories, planes and activities. The company may also extend the franchise to other devices beyond the PC. Executive Producer Joshua Howard hopes the game will draw more than 20 million players eventually.

Howard (left) leads a studio with about 50 employees, a third of whom are veterans of the ACES Studio behind "Flight Simulator" that Microsoft wound down in 2009.

Here are edited excerpts of an interview this week with Howard:

Q: Gaming on Windows has seemed to languish, maybe because so much energy was around Xbox. How much is this release a sign that the Windows game group is back, especially with Windows 8 coming up soon?

A: Some folks on my team will say Games on Windows isn't what it used to be. You're forgetting it is certainly the biggest platform for gaming anywhere, ever. I feel like the PC has been the most successful platform when it comes to gaming because gaming as a whole has become mainstream - 75 million people playing Facebook games of one form or another, that's all on a PC. It didn't happen on a console, it didn't happen on a closed mobile platform.

As Microsoft - to have built that system and allowed that to happen - we don't get to take credit for everything people do on a PC but that didn't happen because we ignored PC gaming. So I think PC gaming is alive and well in fantastic ways in fantastic ways. It's still where the heart of innovation is happening.

Q: I didn't mean PC gaming as much as PC game development within Microsoft. Perhaps the company felt it no longer needed to seed the market so much?

A: It's doing very well so that's right, maybe that's part of what it came down to.

Q: Is Flight intended to seed online services and bring people into Microsoft's online realm?

A: I like to think this is both about reimagining a franchise that we know has always been successful. I also think it's part of Microsoft the studio saying 'I want to develop this new muscle.' Maybe because we have so much of the organization focused on the console-side of the business which is more rigid when it comes to business models, you get to ask the PC side to be a little more experimental, a little more exploratory. I relish that opportunity and the team has really jumped on that. We couldn't be doing half the things we do here on a console - this is not a console game that just happens to sit on a PC. This is really a PC game and we're proud of that.

Q: Is your studio just building this title?

A: I imagine this is a group of people who will continue to bring flying experiences out over time. This is where we are right now.

Q: One you've developed new muscles, you want to keep using them ...?

A: There are a lot of really cool, exciting platforms on the horizon. I'd love to think that someday you'll be hearing from me about how we're going to bring Flight to those exciting opportunities.

Q: On tablets and other devices with Windows?

A: It could be broader than that even. As a division we no longer organize around your PC games and your console games. We're a team that's about the thrill and experience of flight.

Q: But it makes sense that your games could be on the new PC form factors running Windows ... like tablets, maybe TVs - the "three screens and a cloud"?

A: Yeah. I believe in crawl, walk, run. We're rebooting a franchise, and that was really hard. We wanted to this well. We took the time and energy to do that. Now this becomes a platform to keep going.

Q: Is it running on Azure and will it be used to showcase the platform's ability to run a massively multiplayer online game?

A: The services could be on Azure but they're not today. It turns out they didn't need what Azure provides as far as scale goes. It's less MMO in that sense. While do have what we think of as interesting and enjoyable multiplayer, it's still not that massive. (Up to 16 players can play together in an online session.)

Q: So the focus is on the PC experience mostly?

A: Yes. The way we talk about it is between the client, and the web site and the community that combines them, that's what Flight means. It's this combination of those three elements working together.

Q: It sounds like a hybrid PC game.

A: Exactly. In many respects we are like an MMO business would be run, we just don't happen to be an MMO. We're taking what is traditionally a game studio and transitioning it into an online business.

Q: Why did Microsoft take so long to resume development of MMO PC games?

A: I think the reality internally is we've continued to incubate and play and continue to try things. You just don't always bring those to market or out until you believe you've got something you can be successful with. I was excited to see that instead of trying innovate in these genres that are already well-understood, Microsoft went off and tried Kinect. I think Microsoft just put their energies elsewhere and it paid off.

Q: Will you sell the game on discs at retail?

A: Sometime maybe in the future but right now we're all in online. Retail is not something we're talking about right now.

Q: Will you get it preloaded with PC hardware?

A: Possibly.

Q: Will it be part of the game suite included with Windows 8?

A: Probably not. We deal with those separately - that's an operating-system business, we're a game publisher.

Q: Will you be able to control the game with gestures, if you attach a Kinect sensor?

A: We're not talking about Kinect support at this time but who knows.

Q: It seems like the tradeoff you made - building richer, smaller locales to explore in the game - is the loss of the full, open world that could be explored in "Flight Simulator"?

A: The bet we've made is that to the non-hardcore simmer, flying the whole world isn't as interesting when there's nothing really interesting to see or do. I do get that for some segment of the audience that was one of the values - I can fly anywhere, into any airport, 25,000-odd airports was crazy.

But I think as you try to broaden and you want to bring in not the next million or two but the next 20 million or 30 million people, you say I will err on the side of more interesting area that's dense than the same amount of content spread all over the globe. There's a lot to do in Hawaii, and Hawaii is gorgeous.

Q: It seems inevitable that you'll have a mobile version someday?

A: We may do other stuff in the future but today we're just talking about the PC version of flight. I think Flight has legs. This is a franchise that's going to keep living for a lot of years. We're going to do that by exploiting all the opportunities that are coming at us, whether that's mobile, new operating systems, new hardware. There's a lot of stuff out there and I think Flight is going to be part of that at some point.

Q: I thought the ACES studio was fully shuttered back in 2009?

A: The reality was inside the company there were already efforts underway to bring that core expertise back together with a new mandate of how they could move forward.

Q: Will Flight make more money than Microsoft's "Gears of War"?

A: I think in the long-run, this franchise will definitely make more money than "Gears." I think Gears is a great. Flight is one of those evergreen franchises in entertainment - this will live another 30 years.

A new game studio in Bellevue surfaced today with plans for an online title targeting the "hardcore social gamer."

U4iA Games is developing what it calls an "online-only, hardcore fremium, first-person social game" that will be released in 2012.

Studio founders previously worked on core games such as "Call of Duty" and "Doom," plus "Guitar Hero," "Spider-Man" and "Tony Hawk's Pro Skater."

They already have 14 employees at offices in the QCB office park on 156th Avenue Northeast.

"U4iA Games is grounded in the insight that core gamers desire robust, social gaming options on social networks and mobile devices," Dusty Welch, chief executive, said in a release. "Playtime and dollars are starting to migrate from console to casual and/or mobile gaming and a new segment is emerging - the Hardcore Social Gamer."

Welch and and co-founder and chief creative officer, Chris Archer, earlier worked at Activision.

Archer moved to the Seattle area from Los Angeles last year to head Sony Online Entertainment's Bellevue studio, then Sony shuttered it in March. He was offered a position at Sony's studio in San Diego but opted to start a new studio instead.

A combination of self-funding and angel investment raised $1.5 million to start the studio, which is now raising $5 million in funding.

NPD's monthly report on U.S. video game sales is darker than a zombie shooter on a failing TV, but there's a flickering light over the pathway ahead.

Sales of games, hardware and accessories fell 23 percent in August - after a 26 percent drop in July. Sales were $670 million, down from $874 million during the same period last year.

A bright spot was sales of hardware, which increased by unit volume after price cuts for Sony's PlayStation 3 and Nintendo's 3DS. But dollar-wise, hardware sales were down 12 percent, to $283 million.

Game software sales were down 37 percent, hurt in part by the late relase of "Madden" - which came out at the end of August rather than the beginning.

I'll bet gamers are also saving up for the raft of blockbusters coming out this fall, including "Battlefield 3, "Modern Warfare 3," "Gears of War 3" and of course, "Kinectimals Now With Bears!"

NPD analyst Anita Frazier said in the release that sales of physical games are down 5 percent year-to-date, but more than half of the industry's sales come during the last quarter around the holidays.

"Given the strong release schedule in the coming months, new physical retail sales could still be flat to slightly up once full year sales are tallied," she said.

Additionally, there were several notable digital game releases that lured gamer dollars during the month, including "Fruit Ninja" on Xbox Live and a new "Call of Duty" map pack, Frazier said.

Microsoft touted Xbox sales during the month, noting that it sold 308,000 Xbox 360 consoles and the platform generated $232 million in retail sales during the month. It also held its 43 percent share of the current-generation console market and outsold the othre consoles for 14 of the past 15 months in the U.S., Microsoft said in a release.

Sony called PS3 sales "very strong the last two weeks of the month," boosted by a $50 price cut and "inFamous 2" bundle.

The top 10 games for the month:

Deus Ex: Human Revolution (360, PS3, PC)
NCAA Football 12 (360, PS3)
Call of Duty: Black Ops (360, PS3, NDS, Wii, PC)
Phineas and Ferb: Across the 2nd (NDS, Wii, PS3)
Cars 2 (NDS, Wii, 360, PS3, PC)
Just Dance Summer Party (Wii)
Just Dance 2 (Wii)
Lego Pirates of the Caribbean: The Video Game (Wii, 360, NDS, PS3, 3DS, PSP, PC)
The Legend of Zelda Ocarina of Time 3D (3DS)
Zumba Fitness: Join the Party (Wii, 360, PS3)

"Star Wars" fans will have to keep waiting for the Xbox Kinect game.

"Kinect Star Wars" was expected to be one of the big sellers this holiday season but Microsoft quietly decided to hold off releasing the title, apparently because its quality wasn't up to snuff.

The game was also a highlight of Microsoft's presence at the E3 game conference, where this photo was taken during the Xbox press event.

A Microsoft spokeswoman today confirmed the delay, which I found out about via Kotaku.

There's no word on when the game will ship. That also puts on hold the "Star Wars" themed Xbox 360 console and controllers that were revealed last month.

"We elected to move the launch date beyond holiday to ensure we're hitting the full potential of the title," said Breanna Wilson, at Xbox PR firm Edelman.

So it's being held for quality reasons?

"It's more just to deliver the best game possible," Wilson said.

The game isn't being canceled outright, she said.

A spokeswoman for LucasArts offered similar statements, saying "we remain committed" to making the best game possible.

Finally, an official Kinect air guitar game is here.

Microsoft today announced "Air Band," a downloadable game/tech demo for the Xbox 360 Kinect that tracks your hands as you play pretend instruments such as guitars, drums and keyboards. It looks like it will capture gestures, like swinging the axe, but not fingering.

The game is for one or two players, but it's less of a full-blown game than a gadget showcasing Kinect capabilities. It's being released through Microsoft's Kinect Fun Labs tech showcase and costs 240 Microsoft points, or about $3.

If you want to save the $3 and have the hardware and programming skills, here's a homebrew version written in C++ using openFrameworks and openCV for image processing that surfaced in December.

"Air Band" was teased during the opening session of Gamefest, a game developer conference that Microsoft is holding at the convention center in Seattle today and Tuesday, before the PAX game conference takes over the center on Friday.

A screenshot of "Air Band":

The $50 PlayStation 3 price cut on Tuesday was just the start of Sony's fall blitz.

Today, the company announced a partnership with DirecTV to stream NFL games to the console.

Both Microsoft and Sony have added sports programming to their consoles to broaden their appeal as entertainment hubs.

The Xbox 360 streams ESPN3 sports content for free, to people who already have some sort of cable subscription, and Sony earlier gave the PS3 apps for subscribing to MLB and NHL packages.

Now, PlayStation owners can stream out-of-market games via DirecTV's Sunday Ticket service for $339 per season, or $50 if they're already DirecTV Sunday Ticket subscribers. Up to 14 games will be streamed via broadband on Sundays.

It doesn't sound as if the Sunday Ticket service is coming to the Xbox this year, at least.

"This isn't an exclusive deal but right now there aren't any plans to bring it to any other game console makers this season," said DirecTV spokesman Robert Mercer.

He added that the plan was to "work with a single partner this year so we have a point of focus to make sure PS3 customers have a great experience."

DirecTV has been pushing to extend the NFL package beyond its set-top boxes and now distributes it to connected devices such as smartphones and Web tablets.

The company also worked with the NFL to display subscriber's fantasy football teams and scores on-screen while watching games, if they're using the NFL.com fantasy service.

Meanwhile Microsoft's NFL presence this year may end up being its logos plastered all over the Seahawks stadium. A spokesman declined to comment.

Screenshots of the DirecTV service on the PS3, showing its icons, and the normal display:

Another Seattle area game studio has been acquired -- the third over the last month -- so I guess we now have a trend.

Griptonite, a Kirkland-based studio with about 170 employees, was sold to San Francisco-based GluMobile in deal worth about $28 million.

Glu Mobile disclosed the deal with its earnings report Tuesday. It's trading 6.1 million shares for the studio.

This came the same day that Sony announced it was acquiring Bellevue's Sucker Punch Productions and three weeks after Seattle's PopCap Games was sold to Electronic Arts.

So who's next - Valve or Big Fish?

Griptonite is a major producer of licensed games tied to media franchises such as Harry Potter, The Lord of the Rings, Spider-Man and The Sims. It's released more than 70 games for the Xbox 360, Wii, DS, PSP, iPhone and other platforms.

Recent titles include "Captain America: Super Solder" for the DS and "Green Lantern: Rise of the Manhunters" for the Wii, DS and 3DS.

The company was started in 2000 and last year expanded with a satellite studio in Hyderabad, India.

Now Griptonite's in the process of shifting to freemium and social games, the first of which will be released in the second quarter of 2012. Glu's release said the studio has $10 million in capital to finance the shift.

Griptonite, which has 10 different project teams, roughly doubles the studio capacity of GluMobile. As part of the deal, 17 key employees are locked up with non-compete agreements.

Glu also announced that it bought Toronto-based Blammo Games for 1 million shares, plus up to 3.3 million more shares if performance targets are met.

Nintendo today launched the 3D video service for its 3DS handheld game player, which went on sale in March.

Called "Nintendo Video," it provides free, downloadable short videos and movie trailers that can be viewed in 3-D without special glasses on the 3DS.

It follows the release last week of a Netflix app for the 3DS, and Nintendo Video in Europe and Japan.

Videos are downloaded to the device via Wi-Fi.

Content will include movie trailers, sports and action clips and music videos, including an exclusive from Ok Go coming July 27. Exclusive content will also be provided by CollegeHumor, Jason DeRulo, Foster the People and Blue Man Group.

Microsoft and Sony are making their game consoles into entertainment hubs with access to proprietary online video stores that rent and sell movies and TV shows.

Nintendo may be heading that direction, but it's not there yet with Nintendo Video.

When I asked Nintendo whether the 3DS video service will offer full-length TV shows or movies, a spokeswoman said the company "hasn't announced anything about full-length content."

Asked about the potential for Nintendo Video to become a store for movies or TV shows, the spokeswoman provided this response, which I think means 'not at this point':

Nintendo Video is a free, one-way delivery system. Once it is downloaded, videos sent by Nintendo update automatically, so there is no way for users to interface with the service beyond choosing which videos to play.

It seems likely that Nintendo Video will evolve and add more capabilities, especially after the company introduces the Wii U with 1080p output. The company's president, Satoru Iwata, told me in June that video services will work well with the upcoming console in part because of its ability to stream content to its portable controller screen.

Check out the Star Wars themed Xbox 360 console that Microsoft and LucasArts unveiled today at the Comic-Con convention in san Diego.

The console is designed to look like R2-D2, and it comes with a C-3PO controller. It also has a white Kinect sensor, which comes in a $449.99 bundle with the new Kinect Star Wars game and is now available for pre-orders.

Microsoft also revealed a new Podracing mode for the game that will be released in time for the upcoming holiday season.

The fate of Seattle's PopCap Games -- one of the most respected studios in the region and the industry -- is now in the hands of a giant California company that has zigged and zagged across the Northwest for more than a decade.

Electronic Arts (EA) has bought and moved studios and hired and fired hundreds of developers from Seattle to Vancouver, B.C., as its strategy evolved, new trends in gaming emerged and fresh ideas surfaced along the Salish Sea.

The selling price of EA's acquisition of PopCap last week -- $750 million in cash and stock and the promise of a $550 million performance bonus -- may offset concerns about the future for PopCap's 500 employees.

But the question of what's next still looms over the studio and other acquisition targets, such as Bellevue's Valve Software and Seattle's Big Fish Games, as well as numerous other tech companies that are in play as deal making heats up.

For some perspective, I chatted with Mike O'Brien, co-founder of another local studio that started the same year as PopCap and was also scooped up by a huge, publicly traded game publisher.

O'Brien, 40, is president and executive producer at ArenaNet, a Bellevue studio with 270 employees who build and run "Guild Wars," one of the world's most successful multiplayer online-game franchises. Seven million copies of the fantasy, role-playing PC title have been sold; now, ArenaNet is nearly done with "Guild Wars 2." (Screenshot above.)

O'Brien is confident the game will overtake "World of Warcraft," the market leader produced by Irvine, Calif.-based Blizzard Entertainment, where he and ArenaNet's other founders worked before starting their studio in 2000. (He's pictured here in yellow, perched on his desk during a recent press event at the studio.)

Looking for a location away from Blizzard, they chose Seattle, where the tech scene was going full tilt and Microsoft was a fountain of software talent. Among the crowd of startups were three other game developers who moved up from California and started PopCap at the same time.

"We talked with all the different studios in the Seattle area -- it was an exciting place, an exciting place to be founding a game company," O'Brien said. "Some of those companies have grown up around us."

That vibe continues, he said.

"I don't know if people outside the game industry appreciate it. You look around and it's Microsoft, it's Boeing and it's T-Mobile," he said. "I don't know if they appreciate what a thriving game-development community there is in Seattle. We may be the top -- and if not the top one of the very top -- game-development locations in the country."

Different routes

ArenaNet and PopCap took different routes. PopCap was largely self-funded, making relatively inexpensive, downloadable PC games. It didn't take outside funding until 2009.

ArenaNet needed more funding sooner, to build a huge and costly online world that would take years of work before the first sale. It started with venture financing, then began looking for a large industry partner in 2002. It ended up being acquired by NCsoft, a large Korean game publisher that used ArenaNet to build its presence in the United States. NCsoft later expanded in Seattle, opening its U.S. and European headquarters here in 2008.

In deciding whether to sell, the team chose to avoid being "in a position where we were scraping for every dime trying to build No. 1 games with lack of resources to do it," O'Brien said. "Being an internal studio really gave us the resources we need to compete at the top of the industry."

O'Brien doesn't know how things will turn out for PopCap, but he said being acquired was great for ArenaNet.

"It was just kind of a perfect fit from the beginning," he said, recalling how the companies clicked from the first pitch to NCsoft executives. "We were giving them the presentation and they were completing our sentences for us."

ArenaNet kept its autonomy and creative direction, in part because it has enthusiastic support from NCsoft Chief Executive Taek Jin Kim, a gamer and game designer. O'Brien said their conversations tend to be about game design, and Kim wants "to make games that he's proud of, that gamers are going to love and that are going to be the No. 1 games in the industry."

Most important, ArenaNet found a buyer willing to wait until a game is fully polished, instead of pushing releases out to meet a quarterly earnings target. It's among an elite group of studios that can say they'll ship a game "when it's done" because quality is more important than the schedule.

That's rare, "but the companies that can do that create the games that gamers most look forward to and sell the most copies," O'Brien said. (Here's a screenshot from "Guild Wars 2" which will have underwater play.)

Others in that category include Blizzard, Valve and Bungie, the Bellevue studio that created the "Halo" franchise for Microsoft. PopCap has also been in this group, and co-founder John Vechey last week told me it will continue making games "at the same glacial PopCap pace."

O'Brien said EA has been through "some seismic shifts over the last 10 years" as it tried different strategies. "I would be nervous as an EA employee -- is there going to be another one of these dramatic shifts?" he said.

One of the last temblors was during the downturn in 2008, when EA laid off 1,000 employees and closed the downtown Vancouver office of its marquee Black Box studio, consolidating the creator of its "Need for Speed" racing franchise into a Burnaby, B.C., campus.

NCsoft has also made adjustments, including a 2008 reorganization that led to nearly 100 layoffs in its Seattle-based NCsoft West organization. But O'Brien said it's been steadied by having a "singular mission" to make online games.

The parent company has also continued to invest heavily in ArenaNet. It had 12 employees when NCsoft bought it, but grew to 65 by the time it launched "Guild Wars" in 2005.

Offline, ArenaNet's success is reflected in glamorous new offices it moved into this spring in Eastgate. There's room for 450 employees to work on several floors connected by a woodsy, open lounge area filled with couches and a fireplace -- designed to be like a huge Starbucks for informal meetings and hanging out.

Was this positive outcome an anomaly?

O'Brien said he's heard about acquisitions that worked out well and those that didn't. "We've certainly heard all the horror stories," he said. "We end up hiring a lot of those people."

So much for the spring recovery in the video game industry.

Sales of game software, hardware and accessories fell 10 percent in June to $1.03 billion, according to a new report from NPD. This follows a 14 percent drop in May sales, after a briefly uplifting 20 percent gain in April.

Maybe gamers are saving their money for upcoming games that were touted at the E3 conference in the first week of June. Or they're spending more on digitally distributed games and virtual stuff.

Hardware sales in June were down 9 percent, software was down 12 percent and accessories fell 11 percent.

Things look brighter for Bellevue's Sucker Punch studio.

Its "inFamous 2" action title for Sony's PlayStation 3 was the third best-selling game on all platforms last month, after its June 7 release.

Here's the top 10 list:

L.A. Noire (360, PS3)
Duke Nukem Forever (360, PS3, PC)
Infamous 2 (PS3)
Lego Pirates of the Caribbean: The Video Game (Wii, 360, NDS, PS3, 3DS, PSP, PC)
Legend of Zelda: Ocarina of Time 3D (3DS)
Call of Duty: Black Ops (360, PS3, Wii, NDS, PC)
NBA 2K11 (360, PS3, Wii, PS2, PSP, PC)
Mortal Kombat 2011 (PS3, 360)
Cars 2 (NDS, Wii, 360, PS3, PC)
Just Dance 2 (Wii)

Sony and Microsoft issued statements noting strong points that weren't disclosed in NPD's press release.

Microsoft said it sold 507,000 Xbox 360 consoles in June and held a 48 percent of the current-generation console market. It said that was the only year-over-year growth among consoles last month. Consumers spent $350 million on the platform in June, it said.

Sony said "inFamous 2" (screenshot below) was the top software SKU during the month, and said its platform "momentum is accelerating" heading toward the fall releases of "Resistance 3" and "Uncharted 3."

Seattle's PopCap Games was acquired by Electronic Arts for up to $1.3 billion, including $650 million cash up front.

PopCap's breakout hit "Bejeweled" established the modern casual games industry that's centered in Seattle starting in 2000. The studio went on to produce a series of blockbuster games that have been played by more than 1 billion people, making it one of the most successful and respected studios in the games industry.

Executives at the companies said Redwood City, Calif.-based Electronic Arts will continue to invest in PopCap and grow the company, which now employs 500 people, mostly in Belltown.

"Quite frankly they are the Pixar of the space," said Barry Cottle, executive vice president of EA Interactive.

"Our goal right here is they keep doing what they do, that they do so extremely well, and there's just some natural synergies we can bring to the table that we can expand and make these guys bigger and stronger and more powerful."

The deal gives EA an especially strong presence on Facebook, where the combined company trails only Zynga, and on Apple platforms where EA and PopCap accounted for six of the top 10 selling games last year.

PopCap was considering going public this fall but employees and founders were wary of how that would change the company's culture, said John Vechey, one of three developers who started the company in 2000.

"The IPO was fraught with risk, it was scary, people were going to start thinking about the stock price all the time. Most employees were worried about that internally," he said.

"Now, instead of getting a couple hundred million in the bank for us to spend, we get world-class publishing" on platforms including mobile devices and social networks, he said.

"I think for us it accelerates what we were going to do by many years - we're going to be seven years faster to achieving world gameplay domination," he said.

Vechey said the deal was "a highly competitive process" with multiple companies interested in PopCap.

EA is paying $650 million in cash plus $100 million in common stock that's going to the PopCap founders and its chief executive, Dave Roberts.

Additional payouts of up to $550 million will be made if PopCap achieves profit goals over the next two years, although the maximum payout would require the company to increase its profits by ten times over the next two years.

PopCap sales cross $100 million last year and it netted about $15 million. (Its growth is shown on the chart below, presented by EA.) To start getting bonus payouts from EA, it needs to grow profits to at least $110 million. To get the full $550 million, it needs to increase earnings before taxes and interest to $343 million over the next two years.

EA expects the deal to add at least 10 cents per share to its fiscal 2013 results, boosting its overall earnings per share by more than 10 percent, according to Chief Financial Officer Eric Brown.

Last year EA's digital business had $833 million in sales, while PopCap did just over $100 million, 80 pecent of which was digital content.

"It adds 10 percent to our digital business right off the bat," Brown said.

EA stock fell about 3 percent to $23.40 in after-hours trading, after the deal was announced at 1 p.m.

Winners of the Game Critics Awards for products at E3 were just released.

The wild and stylish "BioShock Infinite" (shown here) won in four categories, including best of show and best original game. (It's rated M, by the way ...)

From a platform perspective, 14 winners are for the Xbox 360, 11 are for the PlayStation 3, 11 are for the PC and one is for Nintendo's Wii.

Seattle area game studios had one win - Microsoft's Turn 10 team's "Forza 4" was named best racing game.

Here's the list:

Best of Show
BioShock Infinite
(Irrational Games/2K Games for PC, PS3, Xbox 360)

Best Original Game
BioShock Infinite
(Irrational Games/2K Games for PC, PS3, Xbox 360)

Best Console Game
The Elder Scrolls V: Skyrim
(Bethesda Game Studios/Bethesda for PS3, Xbox 360)

Best Handheld Game
Sound Shapes
(Queasy Games/SCEA for PSVita)

Best PC Game
BioShock Infinite
(Irrational Games/2K Games for PC, PS3, Xbox 360)

Best Hardware
PlayStation Vita
(Sony Computer Entertainment)

Best Action Game
Battlefield 3
(DICE/EA Games for PC)

Best Action/Adventure Game
BioShock Infinite
(Irrational Games/2K Games for PC, PS3, Xbox 360)

Best Role Playing Game The Elder Scrolls V: Skyrim
(Bethesda Game Studios/Bethesda for PC, PS3, Xbox 360)

Best Fighting Game
Street Fighter X Tekken
(Capcom/Capcom for PS3, Xbox 360, PSVita)

Best Racing Game
Forza 4
(Turn 10 Studios/Microsoft Studios for Xbox 360)

Best Sports Game
FIFA Soccer 12
(EA Canada/EA Sports for PC, PS3, Xbox 360)

Best Strategy Game
From Dust
(Ubisoft Montpellier/Ubisoft for PC, PS3, Xbox 360)

Best Social/Casual Game Sound Shapes
(Queasy Games/SCEA for PSVita)

Best Motion Simulation Game
The Legend of Zelda: Skyward Sword
(Nintendo EAD/Nintendo for Wii)

Best Online Multiplayer
Battlefield 3
(DICE/EA Games for PC, PS3, Xbox 360)

Best Downloadable Game
Bastion
(Supergiant Games/WB Games for PC, Xbox 360)

The Supreme Court's ruling that violent video games can be sold to children puts the onus on parents to protect their kids from offensive games.

Citing First Amendment protections, the court rejected California's efforts to restrict sales of violent games to children under 18.

The government shouldn't be trying to decide what's acceptable content, and politicized censorship is more offensive than any video game. But the ruling is a little troublesome because it's not a pure First Amendment question and gets into what material should be accessible to kids.

The court basically told California it can't make it illegal for retailers to sell kids violent games, even games that carry a "Mature" rating that's equivalent to an R or MA rating on movies. Instead, it pointed toward the industry's voluntary rating system, which encourages retailers to refrain from selling mature games to minors. The problem is the state being the one to define what's acceptable.

"This system does much to ensure that minors cannot purchase seriously violent games on their own, and that parents who care about the matter can readily evaluate the games their children bring home," the ruling said. "Filling the remaining modest gap in concerned-parents' control can hardly be a compelling state interest."

Lots of parents don't care what games their kids play, judging from my conversations with pre-teen kids.

Maybe parents don't think the games are a big deal, or they don't have the time to manage their family game systems.

Perhaps those who are really worried about violent games don't understand that all current consoles have built-in parental control systems.

This technology has been sitting there all along, enabling families to do what states cannot, under the Supreme Court ruling -- block children's access to violent games.

In other words, kids can buy all the violent game software they want, but they won't be able to play them at home if parents take charge of the hardware on which the games are played.

"I don't have time to deal with that" is a weak excuse. Video games increase the amount of time parents have available, because they glue kids to the TV set for an extended period of time.

It takes just a few minutes to set parental controls on a console. Once they're set, the console is locked down until parents decide to change the settings.

It's not complicated -- it's far easier than tweaking a Facebook account, and takes about the same amount of time as paying a bill online.

All three current consoles -- Microsoft's Xbox 360, Sony's PlayStation 3 and Nintendo's Wii -- enable parents to create a password and decide whether to block kids from playing violent or racy games.

The consoles use the game industry's standard rating system -- "E" games are for everyone, "T" games are rated for teens and "M" games are for mature players 17 or older. The boxes usually specify why the rating is given, noting whether the game has violence or nudity, for instance, and ratings are encoded on the discs.

Here's a quick overview of how to set up parental controls. For more information, each of the console makers has detailed instructions online that I've linked to below.

On the Xbox 360, go to "My Xbox" and select "Family Center" or "Family Settings." Click on "Console Safety" and click "On." The First Amendment right to violent video games is now void in your rec room.

You can click "ratings and content" to adjust the settings further.

On Sony's PS3, go to "Settings" on the main menu and "Security Settings." Select "Change Password" and create a password -- the system comes set with "0000" as the password. The system lets you choose which rating level is allowed, without having to enter the password. The same password system can also be used to block playback of video discs with mature ratings.

On Nintendo's Wii, go to Wii System Settings. Click the blue arrow to access additional menu options. Choose "Parental Controls" and select "Yes." The system uses a four-digit PIN number to access these controls. It lets parents choose the "Highest Game Rating Allowed" on the console.

The Wii parental controls (picture below) can also be used to restrict use of the Opera browser, if it's been downloaded to the console, and use of its online communication and shopping capabilities.

There are also parental controls that limit what games can be played on the PC, including Microsoft's free Live Family Safety service.

A footnote: These programs are easy and powerful, but they won't guarantee that kids won't see violent video games.

There always seems to be a friend down the street with parents who let them play whatever they want, or with an older sibling who lets them play M-rated games.

Fortunately, most kids turn out fine no matter which games they play. If they go astray, it's unlikely that bloody video games will be the culprit.

Microsoft's next Xbox will be unveiled within a year, probably at next year's E3 conference in June 2012, according to a report at VideoGamer.com.

Citing a source at game developer Crytek, the report said Microsoft's gearing up to release its new console ahead of Sony's next PlayStation. The timing would also put the new Xbox on the market at roughly the same time Nintendo releases its Wii U.

From the report:

"The Crysis 2 developer says that Microsoft will announce the existence of a new Xbox within the next 12 months, hinting that an E3 2012 reveal is likely. Crytek believes that Microsoft will announce and launch its new machine ahead of rival Sony, though the developer is also investing resources into next-generation PlayStation development."

This follows a May report that said Microsoft had delivered an early version of the new console - a development box - to Electronic Arts.

Microsoft executives have said they intend to keep selling the Xbox 360 through 2015, and they characterized last year's arrival of the Kinect as essentially a new platform launch, though that doesn't rule out a new system being available before then.

Especially if Nintendo's Wii U starts attracting the hardcore gamers who are responsible for much of the 360's success.

A Microsoft spokesman declined to comment on "the rumors."

Video game sales dove 14 percent in May, nearly erasing the 20 percent gain seen in April, according to NPD's latest report on U.S. game sales.

It was the worst showing since October 2006, pulled down by a slim lineup of new games, the firm said.

The research firm politely waited until after the E3 show to release the data, which would have cast a shadow over the event and changed the tenor of its press coverage.

Total sales were $743.1 million, down 14 percent from $866.8 million last year.

Game software sales were $400.1 million, down from $503.8 million in May 2010. But the report only includes physical games, hardware and accessories and not digital downloads, NPD analyst Anita Baker noted in the release.

"Keeping in mind that these sales figures represent just the new physical portion of the market for video game hardware, software, and accessories and not the growing portion of the industry that is comprised of digital format content distribution, May 2011 was the lowest month of sales for the industry since October 2006. A light slate of new releases is at the heart of this month's performance."

Baker said there were 42 new titles, but SKU, last month, compared to 58 in May 2010 and 72 in May 2009. This in turn reduced promotional activity and advertising, "which undoubtedly affected not only planned but impulse purchases."

All platforms saw declines except the Xbox 360, which was about flat - posting a 1 percent gain. The Xbox has accounted for 34 percent of physical game sales year-to-date, a share increase of 7 percent over last year, NPD said.

Microsoft said the Xbox 360 platform accounted for $265 million in retail sales in May.

Sony's PlayStation 3 and PSP also gained during the month and Nintendo's 3DS sales were "light" though NPD's expect a bump with the "Zelda" game for the 3D handheld.

Here are May's top 10 games in retail, in order of sales:

L.A. Noire (360, PS3)
Brink (360, PS3, PC)
Lego Pirates of the Caribbean: The Video Game (Wii, 360, NDS, PS3, 3DS, PSP, PC)
Portal 2 (360, PS3, PC)
Mortal Kombat 2011 (PS3, 360)
Call of Duty: Black Ops (360, PS3, Wii, NDS, PC)
Zumba Fitness: Join the Party (Wii, 360, PS3)
NBA 2K11 (360, PS3, Wii, PS2, PSP, PC)
Just Dance 2 (Wii)
Lego Star Ware III: The Clone Wars (Wii, NDS, 360, PS3, 3DS, PSP, PC)

LOS ANGELES -- There's another real-estate crisis happening, causing all kinds of grief for people who own multiple video-game systems.

The latest gear from Microsoft, Sony and Nintendo requires more than just a box sitting below the television.

To play their motion-sensing games, you also must mount a sensor unit on or near the TV. If you have more than one console, it gets tricky figuring out where to put all of these peripherals.

It's going to get worse. Google, Cisco, Logitech and others are pushing TV video-chat systems that require their cameras to be mounted somewhere next to your set.

So it's no wonder there was a lot of interest in an odd little gadget on display at the Electronic Entertainment Expo, in the no man's land of aftermarket game-accessory booths.

Called the TriMount, the $30 device clamps up to three different sensors onto the top of a TV set.

Torrance, Calif.-based dreamGEAR will begin selling it Aug. 15.

There's a side benefit for fans of military-action games. When the TriMount is fully loaded with an Xbox 360 Kinect, a PlayStation Eye (for its Move controller) and Nintendo Wii Sensor Bar, it makes your TV look like a radar-encrusted warship.

Stats galore

Those motion sensors are helping to change people's perception of video games, according to a new report from the Entertainment Software Association (ESA), the trade group that hosts E3.

Its surveys found 59 percent of parents think computer and video games provide more physical activity now than they did five years ago. The ESA also found 72 percent of American households play computer or video games, the average age of players is 37, and 29 percent were older than 50.

By gender, 58 percent of gamers are male and 42 percent are female. The ESA notes young boys aren't the primary audience -- boys younger than 17 account for 13 percent of the game-playing population. Women 18 or older account for 37 percent.

The report also said 86 percent of parents are aware of the rating system that labels games with their appropriate age range.

Girls, girls, girls

The other 14 percent of parents better start paying attention to game ratings because of another trend in evidence at last week's show.

That would be misogyny, which appears to be making a huge comeback in video games. "Leisure Suit Larry" -- the pervy game character from 20 years ago -- would feel right at home.

As you approached E3, THQ's "Saints Row: The Third" was being promoted with (teeny) bikini carwashes. Inside, game developer Nival invited attendees to "get some tail" in an inflatable bouncy house with "booth babes" sporting pinned-on fox tails and wiggling their chests.

Provocative releases include "Catherine," a racy Japanese anime-style horror game coming to the Xbox 360 and PlayStation 3 this summer, and "Duke Nukem Forever," an update of the 1990s action hit with strippers, booze and guns.

"Inappropriate, insensitive and offensive -- you bet," the Duke Nukem box promises.

Maybe studios were desperate after game sales declined last year. Or they're just being opportunistic and publishing what sells to a mostly male audience.

Yes, these games are rated "M," for mature audiences.

Force is with us, forever

Games look better and are getting cool new control systems, but their stories must keep up with the technology.

Practically every major title promoted at the show was a sequel, and the biggest were the third installments of trilogies. Microsoft's biggies included "Mass Effect 3," "Battlefield 3," "Call of Duty: Modern Warfare 3" and "Gears of War 3," plus "Forza 4" and an early peek at "Halo 4."

Sony blockbusters included "Uncharted 3: Drake's Deception" and "Resistance 3," while Ubisoft announced "Far Cry 3."

There were also more "Star Wars" games, including a Kinect version (below) coming out this holiday season and EA's multiplayer, online "Star Wars: The Old Republic" launching by year's end.

I love "Star Wars," and it's amazing how much creativity the movies inspired. But after dozens of "Star Wars" games over the last three decades, you've got to wonder how long it can go on. I guess it's like the burger and fries of video games -- everybody does a version, and people keep eating them up.

I left the show wondering what's going to inspire the next generation of games and whether we're just going to keep updating the golden oldies forever.

Maybe we'll move forward, now that we've figured out what to do with all those sensors stacked up by the TV.

LOS ANGELES -- Here's Peter Molyneux, creative director of Microsoft's European game studios, explaining how "Fable: The Journey" was designed to use the Kinect sensor while sitting on the couch.

During a closed-door demo, he said it's easier to get immersed in the rich story when you're seated, as opposed to leaping and waving in front of the sensor.

Players explore the fantasy realm from a horse-drawn wagon, using arm gestures to control the reins.

Molyneux said the sensor's scanning capability will be used during emotional parts of the game that will be disclosed later. The game's scheduled for release in 2012.

A screenshot:

Authorities in Spain have arrested three people accused of perpetrating the attack that stole user information from Sony's PlayStation Network and led to an extended shutdown.

Sony shut its network - the cornerstone of its connected entertainment strategy - on April 20 and is still working to fully restore the system. Last week more than 90 percent was back and on Thursday it restarted the Qriocity video service everywhere execept Japan.

Police found a server that had also been used to attack banks and energy companies, according to a New York Times report.

Presumably that means the attackers will face more than the dreaded comfy chair:

LOS ANGELES _ Microsoft will partner with regional cable companies to bring live TV onto the Xbox, a new feature that it announced Monday at E3.

That means the TV services will be provided through cable and satellite companies, and Xbox owners will need to subscribe to their services to get the live TV onto their game console.

That's according to Mike Delman, vice president of global marketing for Microsoft's interactive entertainment business group.

During an interview in Microsoft's elaborate, two-story booth at the show, Delman also talked about Skype on the Xbox, Kinect's new capabilities and how Xbox Live is going to become an entertainment service for Windows 8 PCs.

Here's an edited transcript of our conversation.

Q: Do you feel you've got as much at E3 as the other guys?

Definitely. We don't have an announcement like a new console but the combination of the games for the hardcore, starting to answer the question about the Kinect for the core, and having a lot more Kinect for broader audiences and the live television has played real well.

Q: Some of your announcements were just a tease, like live TV coming this fall to Xbox. Did you hold back details because partnerships aren't done yet?

We have partnerships in certain places. It's kind of ironic we have a lot of international partnerships before we got some of our U.S. partnerships done. The reason we talked about it is doing the platform work - doing voice, doing Bing search, getting the UI to be a modern UI, is really the hard work. Layering in the content isn't as hard, so it's a natural sequence.

Q: The interface seems designed to plug in another tile when you get a new content partner.

Yes, bringing in the live content - a lot of people are just layering in tonnage, they're not putting interactivity and discoverability in it. Getting the interactivity and discoverability built, so the content can sit on top of it - getting the platform work done is the hard part.

Q: Will live TV be universal, or will it be regional TV services provided by whoever your cable provider is?

It will be tied to either a satellite broadcast company or a cable company. So in international markets, you'll just have one provider. In the U.S., it will be bifurcated by region, by market. You'll be a Comcast guy (in Seattle), for example.

Q: So you'll have to be a Comcast subscriber, similar to the way you need a subscription to get the ESPN content on the Xbox now?

Yes.

Q: Will the Bing search be full Web search or just for entertainment?

It will be full search on what you have on Xbox Live. So anything that's available on Xbox Live if you're a gold subscriber it will search all of that, it won't go out and search the Web.

Q: Why not add Web search as well?

Listen, when we've got tens of millions of pieces of content just on our service, being able to search that - music for example, we've got 11 million music titles now - just mastering that in a bunch of different languages is a big priority. People at this point have other ways to get out to the Web.

Q: It seems like you could point the search at Bing's entertainment channel.

It's just not in the plans.

Q: Because you are using Bing, can you also serve ads against the results?

That's not part of the plan but it can be done. A lot of it will probably be serving ads within the content more than within search.

Q: It seems to be mostly about utility, making search easier than pecking out letters on the screen.

People will be doing stuff with their voice in probably a quarter the time it takes to go through the menu with the controller.

Q: With hardcore games, Kinect is still doing auxiliary things mostly, rather than controlling the main action. When are we going to see that?

People need time to build a core, triple a title from the ground up with Kinect. People are starting to build core games from the ground up. The core doesn't want the controller to come out of their hand, necessarily. ..In a way I think voice (with a controller in hand) will be as powerful or more powerful to the core than will gestures, and the gestures won't be the sweeping gestures you have in the broader Kinect. I think they'll be more pointed gestures like a head-fake or a head-butt. ... People are being very smart about doing something that will enhance the core experience rather than totally change it.

Q: So will "Halo 4" be a Kinect game?

I'm sure we'll have some Kinect in it but we're not that far along.

Q: We've seen voice and gesture controls but not much use of Kinect's scanning capability.

The scanning actually wasn't fully enabled until the "Fun Lab" stuff unveiled (Monday).

Q: I also wondered if scanning or the finger tracking you've shown here would need new hardware with better sensors.

No, you can actually do that stuff now. Some of the things that will be interesting in the next generation of sensor will maybe a more high-definition RGB camera so the video conferencing is better than it is now. Skype, if it comes to fruition - you can see a lot of possibilities.

Q: I was surprised we didn't hear about Skype in your E3 press conference, but I guess the deal hasn't closed yet ...

I'm probably out of bounds talking about it.

Q: Maybe you'll announce Skype on Xbox at CES in January?

Whenever it clears, there's a lot of possibility with that.

Q: Because there's a new Nintendo console that runs hardcore games coming, will people hold off buying an Xbox or adding Kinect to their console?

I don't know what the reaction's going to be relative to their own platform. All I know is we're in the fifth to sixth year of our platform and platforms have never grown in the fifth or sixth year at what we're seeing. Other platforms is not what we're focused on, we're focused on how do we make Kinect, how do we make Live as compelling as possible. In a way a lot of what's going to happen is the box doesn't become the focus going forward, it's what is the sensor, what is the handheld, what is the phone companion, what is the service companion and what are the experiences.

Q: Speaking of phone, I was surprised we didn't hear about connections between Xbox and Windows Phone here at E3.

Live has been successful on the Windows Phone, Live will be built into the PC; it will be the service where you get your entertainment. We were talking about it - you will not just see consoles and handhelds at this show next year, this show's going to morph into other devices.

Q: Will Xbox offer games on certified phones, similar to what Sony's PlayStation is doing with Android phones?

We think there's a lot of potential on the Windows phones. With the Nokia relationship, we're going to have a lot more distribution of phones and Live will be the primary entertainment service. I think that's going to be a good play for us. If we have that and the PCs to leverage, that will be a big Live base. It's our job to make 'buy a movie in one place and play it everywhere, buy a game in one place and play it everywhere.' Making things portable through the devices will be a big focus of ours.

Q: Will Microsoft's Zune service continue building up its video and music stores, or will you be working more with partners running content stores?

We're very committed to offering music and video and TV shows on our own service through Zune.

Q: I don't think I heard the "Z" word in the keynote. Are you phasing out the Zune brand?

In general I think what you're going to see is us talking about 'music' and 'video.' I think what we're coming to the realization about is putting brands on top of brands on top of brands is not as, you know - if you want to look for music, just knowing it's under a category (music) is a good thing.

Q: Speaking of branding, Xbox brands are all over Qwest Field. Are you going to go the next step and name the whole stadium, taking that over from CenturyLink?

Not that I know of. I'm a little worried we might own the whole city of Seattle if we keep doing sponsorships with everybody.

Q: How will your services and content be part of Windows 8?

There will be a lot of similarities in design and service philosophy. Whether it's us or Apple or anybody else, people want to be able to navigate through multiple devices in a certain ecosystem very seamlessly so we're committed to that.

Q: Will Xbox Live be your cloud media service that works with your Windows PC as well as your phone and Xbox?

Xbox Live will the pervasive media service across devices.

Q: Right now it's a little confusing - you've got Xbox Live, SkyDrive storage and other online places for media.

We have a ton of assets. Unifying the assets will be good for us and good for consumers.

Here's the line to see Nintendo's Wii U at the company's E3 booth.

A sign inside the booth said the wait would be an hour, which was unlikely. When I took this video Wednesday, the line snaked around the booth and then zigzagged through the interior space.

Some of the fans in line broke out their DS handhelds to while away the time.

Here's the full version of my Wii U story that includes material from an interview with Nintendo President Satoru Iwata. Among the topics we discussed were streaming video to the Wii U controller and competition with the iPad and other tablets.

LOS ANGELES -- Five years after its motion-controlled Wii changed the way people play video games, getting them to move arms and bodies, as well as fingers, Nintendo on Tuesday revealed another radically different console that it will begin selling next year.

Called the Wii U, the system is based on a souped-up version of the Wii that outputs high-definition video and runs the ultrarealistic action games that dominate the industry but are subpar on the lower-definition Wii.

The new system's highlight is a control pad that looks somewhat like a tablet computer crossbred with a Nintendo handheld game player.

Wii buttons on the controller flank a 6-inch diagonal color touch-screen that mirrors -- or extends -- what's displayed on the TV screen.

The controller can be thought of as a gaming pad that someone can play with on the couch while another person is watching the TV, similar to the way people use the iPad to browse or play casual games while others are watching a show or movie.

Games can be played entirely on the controller, including board games when it's set on a table, or it can be used as a traditional controller with games played on a TV set. As a controller, it can be used to aim pitches in baseball games, or set on the floor to work as a golf tee. The device can also be used to make video calls and as a drawing tablet, when used with a stylus.

"Up until now home console games had to occupy the TV screen to be played," Nintendo President Satoru Iwata said during the unveiling at the Nokia Theatre at the Electronic Entertainment Exposition (E3). "You won't need to give up your game play when someone else comes into the room and wants to watch a TV program."

The console's name is a play on the word "you," Reggie Fils-Aime, president of Redmond-based Nintendo of America, explained during the Nokia Theatre unveiling. He teased that it's "unique, unifying, maybe even Utopian."

"We want to create a strong bond between games, your TV and the Internet and also similarly between you, your friends and your family, all interacting in the same room," he said.

Nintendo designed the console to work with one of the touch-screen controllers and up to four of the current Wii Remote motion controllers, guaranteeing a million hours of bickering over who gets to use the big remote. The system also is compatible with current Wii games and accessories, including its hugely popular Balance Board fitness system.

Front and rear cameras on the new controller enable it to run "augmented reality" games that Nintendo began selling earlier this year for its 3DS handheld gaming device. Such games use cameras to place an image of the player into the game and incorporate the space around the device into the game's landscape. On the screen, it may appear that you're shooting arrows at a cartoon version of your head as it bobs around the room, which itself appears to sustain damage from the action.

But mind-bending new games are only part of Nintendo's goal with the new system, with which it hopes to leap ahead of the next generation of game consoles that will arrive over the next four years.

Nintendo executives said they hope the system bridges the gap between casual games that are the current Wii's strong suit and hard-core games, which are most popular on Microsoft's Xbox 360 and Sony's PlayStation 3. A parade of game publishers announced Tuesday that they'll produce Wii U versions of blockbuster franchises such as EA's "Battlefield" and Ubisoft's "Assassin's Creed."

Electronic Arts Chief Executive John Riccitiello came on stage during Nintendo's media event and called the Wii U a "stunning breakthrough in game technology."

Nintendo also needed a system with 1080p video output to keep pace with video services on the Sony and Microsoft consoles. They have positioned the Xbox and PS3 as entertainment gateways that connect TV sets to online video services and, now, live TV broadcasts.

Although Nintendo hasn't yet announced video services for its new console, Iwata said during an interview that the Wii U has an advantage because the controller can be used as an auxiliary TV display, so you can carry it into the kitchen, for instance, and continue watching a movie or show on its screen.

Iwata also said the touch-screen works well for searching and selecting content, suggesting that it will function as a sort of super remote control for streaming-video services.

"That is going to be more convenient for you in comparison with how you have to do that with your TV set," he said.

Although the controller can be used in similar ways to an iPad or other tablet -- as a device to entertain on the couch while the TV is on -- Iwata said Nintendo isn't chasing tablets with the controller.

"First of all, when we first thought about the possibility of adding a second screen with a new controller there was no talk about tablets at all. We have never thought about a tablet as a kind of competition," he said.

"But I think that we can take that as an advantage because today most of the people understand how to take advantage of the tablet in their life," he added. "Without it probably we would have a hard a hard time explaining how you can change your daily lives having such kind of things, with a controller with a screen."

Iwata declined to give details about pricing or the release date, but said the Wii U will go on sale sometime between April 1 and Dec. 31 -- after Nintendo's fiscal year ends in March.

After restarting its PlayStation Network over the weekend, Sony today announced freebies it's offering users to make up for the nearly monthlong outage.

The gifts are on top of the 12 months of an identiity theft protection service that Sony is offering to some 77 million users affected by its compromised network. It remains to be seen whether the gifts are enough to restore faith in the network and avert class-action lawsuits.

Users in North America are being offered two free games from a list of five older titles, including "inFamous" from Bellevue's Sucker Punch Productions. The games will be available once the system is fully restored, and users will have 30 days to download their choices.

Other choices are "Dead Nation," "Little Big Planet," "Super Stardust HD" and "Wipeout HD + Fury."

Sony is also offering PSP portable owners two free games from a list of four: "Little Big Planet," "ModNation Racers," "Pursuit Force" and "Killzone Liberation."

Sony is also giving network users access to a selection of free movies over one weekend. The titles and timing will be announced later.

Network users will also get 30 days of free access to the premium "Plus" service and Plus subscribers will get 60 days of free subscription.

Users of Sony's "Music Unlimited Premium Trial" subscription service will get an additional 30 days of free premium service, and subscribers to the premium and basic services will get a free 30 days of service plus time lost during the outage.

Sony's also giving away 100 free virtual items to use in its PlayStation Home virtual realm. New free content will be added soon, hopefully including padlocks.

Spreadsheets and word processors persuaded people to buy early PCs. Messaging and mobile browsers did the same thing for smartphones.

If you haven't bought an iPad or tablet computing device yet, maybe it's because you're not yet hooked on "Angry Birds."

The addictive slingshot game is the killer app for these touch-screen gadgets filling the gap between smartphones and portable computers.

People buy tablets thinking they'll use them instead of computers, but most don't. They end up playing "Angry Birds."

Last week a Nielsen survey said most tablet owners are using their PCs as much or more than they did before buying their tablet. Earlier, the firm said games are the most downloaded mobile application, and the best-selling app, is "Angry Birds."

The game, made by a small Finnish company called Rovio, has been downloaded more than 140 million times, and at least 40 million people per month are playing. They're collectively spending more than 200 million minutes per day tapping and flinging birds across the screen, trying to knock down a series of structures built by obnoxious pigs.

"Angry Birds" was originally designed for the iPhone in 2009, but it's best on a tablet, where you can see more of it and have more room to control the aiming.

"It's certainly the most dominant game on tablets. There's nothing close to it, I believe," said Rich Wong at Accel Partners, a Silicon Valley venture firm that backed Facebook and invested in Rovio in March.

It makes you wonder if Microsoft hooked up with the right Finnish company to resuscitate its mobile business. Maybe it thought Nokia was behind the birds.

After handling more tablets than an Egyptian librarian, I've come up with a shopping guide, for those willing to spend $250 to $800 for the best "Angry Birds" experience.

Motorola Xoom, $599-$800

"Angry Birds" is prominently featured on the Xoom packaging, and the game works well on the device.

The Xoom's 10-inch screen is a good size for displaying both the launch area and target structure, even on upper levels with passages, outbuildings and stashed explosives on the far right side of the screen.

Although it's the first Android tablet with a dual-core processor, there wasn't a noticeable difference in loading. Nor did it reduce the wait time between levels.

On a bus, the Xoom's considerable heft steadies the device enough to play on bumpy roads.

The Xoom did cause one embarrassing birds incident.

During a discreet session Friday, before my deadline, the app abruptly froze. When I restarted it, it launched with the mute button off. There was no warning of this changed setting, and I was busted by the loud theme music.

Frantically tapping the screen and pressing the power button didn't stop the telltale flute. It took forever to power off, and paused to ask "are you sure?" before it stopped.

Otherwise, the Xoom scored well in the "quick exit" test. I could close the game and pretend to be working with a single click.

Barnes & Noble Nook Color, $249

After updating the Nook's operating system, you can download the original version of "Angry Birds."

The Nook market offers only the original "Angry Birds," for $2.99. Later versions and the free, ad-supported ones aren't available yet.

The Nook is the most economical option for tablet birding and doubles as a browser and electronic book with a 7-inch touch screen.

It also fits in a large pocket and weighs just less than a pound. However, this portability made it difficult to hold the device steady on the bus, where I experienced a number of misfires and errant shots.

Resolution on the Nook didn't seem as crisp as on higher-end tablets. I could see jagged edges on the blades of grass.

The Nook fared the worst in the "quick exit" test, requiring six clicks to exit in the middle of a game.

Apple iPad 2, $499-$829.

The iPad's big, bright screen is terrific for "Angry Birds" and provides plenty of room to aim.

Action is crisp and Rovio seems to put extra sparkle into the iPad version, highlighting edges of structures, for instance.

Both free and paid versions are available from iTunes, where the latest version of the game is the best-selling paid app. Two earlier versions are in the top 10.

There are a few niggles, though. The iPad version takes it upon itself to adjust the horizontal scroll mid-game, which gets annoying.

Also, every time you start a game, the iPad suggests creating or signing in to an account with Apple's "Game Center" service. There isn't an obvious way to disable this nagware, so you have to hit "cancel" every time. Then you get a message saying that "Game Center" is disabled, and you have to hit "OK" to start playing. This reminds me of Windows Vista.

It takes one click on the iPad to exit a game, return to the home screen and appear to be working.

BlackBerry PlayBook, $500 to $700

The PlayBook is a pocketable, 7-inch touch-screen device that's widely available. But "Angry Birds" is not yet available on the BlackBerry market. An emulator that will run Andoid apps is being developed.

T-Mobile G-Slate, $530.

The G-Slate has an unusual 9-inch widescreen display format that's particularly well suited for "Angry Birds."

However, the screen also partly cuts off the information displayed on the Android Market, including the "more" button listing additional version of "Angry Birds" available from the store.

Like the Xoom, the G-Slate is based on Google's new Android 3.0 software.

Currently, only free versions of "Angry Birds" are available for Android but paid versions are expected later this year.

Loading the game via T-Mobile's 4G network was significantly faster than it was on the Xoom over Verizon Wireless' 3G network, but the Xoom should be upgradeable to 4G before new "Birds" are released.

It takes a single click to exit a game and return to the home screen of the G-Slate.

Dell Streak 7, $200-$450.

The Streak has a 7-inch screen that's just a hair smaller than the Nook, but overall the device is smaller and fits easier in a pocket for portable play.

It's more like a computer than a Nook, and both its launch area and target can be displayed at a reasonable size. That makes the game more enjoyable than on a smartphone with a 3-inch or 4-inch screen.

However, the Streak resolution isn't as crisp as the larger tablets and the device would re-size the game between levels, requiring a tedious extra pinch to get the game properly aligned in the screen.

The re-sizing isn't a game-breaker, but these little design decisions lead to wasted time that adds up fast.

Seriously, how do they expect us to get any work done with these things?

Details are scarce, but Microsoft confirmed today that it's opening a new game studio a few hours north of Redmond, in Vancouver, B.C.

A spokesman told me via email that the studio will be focused on "games for core gamers" but wouldn't say much else.

A Gamasutra report suggested the studio was initially working social, microtransaction games, but will now build a triple A shooting game for Kinect, something that hasn't been done yet. Maybe it will produce the first Kinect-enabled Facebook action title.

Microsoft is advertising for 10 positions at the studio, including creative, technical and art directors, so it apparently doesn't yet have a huge team in place yet.

What's a little odd is that Microsoft already has another game studio in Vancouver.

In 2009 it bought BigPark, which was part-owned by Don Mattrick, the Vancouver native who is now president of Microsoft's interactive entertainment group. BigPark became part of Microsoft Game Studios and made "Kinect Joy Ride."

Microsoft also set up a big research and development center in Vancouver in 2007, with more than 250 people.

Nintendo's announcement that the new Wii will appear in June leaves a lot to the imagination.

Here's the full statement, which doesn't say anything about whether the device will have high-definition playback, 3D capabilities or much else:

Nintendo's new 3DS game player is hands-down the coolest new toy in the world for kids 13 and under, and those who just love electronic toys.

It's more fun than a barrel of smartphones.

It's too expensive and some may think it's gimmicky, but the 3DS will give Nintendo bragging rights again, until it comes out with a new version of the Wii console.

The 3DS goes on sale for a dizzying $250 on Sunday, a month after its blockbuster release in Japan.

Not many kids will be able to afford one until the price comes down. It costs more than an Xbox or a Wii.

But eventually the 3DS will end up in the hands of millions, and it may change the way they think about video games.

From the outside, the 3DS looks a lot like the DS handheld game players that Nintendo has been making for years. It's a solid, half-pound, 3-inch by 5-inch slab available in black or blue.

What's new is a system of cameras, lenses and software that display games and video in 3-D without requiring special glasses. The 3-D displays on a 3.5-inch diagonal screen. There's also a second, 3-inch touch screen.

It's more than just another 3-D video player being pushed onto mostly indifferent consumers, though. Instead of using 3-D mostly for gratuitous special effects, Nintendo designers used the technology to create exuberant, mind-bending games that blend the real and virtual worlds in unexpected ways, creating a new kind of fun.

Consider "Face Raiders," one of the preloaded games. Players take a picture of themselves, a family member or a friend with the 3DS, and the face becomes an animated ball, bouncing around the screen, making faces and sticking out its tongue.

The animated head is actually bouncing around the room beyond the device. The game's landscape is a live image taken by the camera on the back of the 3DS. Peering into the screen is like looking through a magic window into an alternative version of the room you're in, which becomes a place where wild things are happening.

You fire yellow balls at the head -- or heads, after they multiply -- before they crash through the walls around you, leaving jagged holes.

Imagine how cathartic and subversive this can be for a kid. They'll appear to be sitting quietly on the couch, but from their perspective, they're smashing apart a room they were just forced to clean, lobbing balls at the cackling, digitized version of their little sister bouncing off the walls and ceiling.

This made me wonder about the enthusiasm that Japanese electronics companies have for 3-D technology. Perhaps the illusion of depth and extra space created by 3-D technology is appealing to people living in small homes in densely populated cities. It will also appeal to kids stuck in their rooms or crammed into the back seats of cars and minivans in the U.S.

Still, software and content are key, and it remains to be seen how many game developers will have as much success with the 3DS platform as Nintendo.

The 3-D effect can seem a little cheesy at times, reminiscent of its distant ancestor, the "animated" Cracker Jack prizes that appear to move when you look at them from different angles.

A 3DS version of Electronic Arts' "Madden NFL Football" was more fun with the 3D turned off, I thought, but maybe it was because I kept seeing double images of things like the field goals.

On all the games, the 3-D effect is sensitive to viewing angle and you have to hold the device about 10 inches from the face and straight on to get it right.

Action in "Lego Star Wars III: The Clone Wars" was dramatically better with the 3-D effect. Bridges extended across chasms, laser blasts zoomed by at different angles and there is, of course, the opening story that recedes into space.

If you were one of the kids who beelined to the periscope at Seattle's Museum of History & Industry, you'll love "Steel Diver," a great submarine game for the 3DS. One option has you peer through a scope, searching for ships hidden by waves in the foreground. When they get close, you see the 3-D depth charges sail toward your sub.

One of the best titles is included with the 3DS. Called "AR Games," it works with a set of "augmented reality" playing cards.

You place one on a flat surface and position the 3DS about 14 inches above the card. Then strange things happen in the room when you look through the 3DS lens.

Seen through the screen, the cards bulge until a box bursts upward. After you fire a few arrows at targets around the box -- calibrating the alignment -- an angry dragon may emerge for you to fight with more arrows.

Another box contains a billiard game in which my coffee table undulated and melted from a lava flow.

But a Mario AR card failed to launch its game, even after I followed the tips and made sure there was plenty of light in the room.

This reminded me of the occasional challenge with Microsoft's Kinect motion sensor for the Xbox 360, which also uses depth-sensing cameras that can be thrown off by a room's lighting.

These cards are an opportunity for Nintendo to sell cheap upgrade packs, like Pokémon cards, but the company didn't provide details of its future plans for them.

To stream movies

The 3DS is also intended to be more of a multimedia device, putting it in better stead against the phones and tablet computers that are pushing into the market for handheld gaming.

Starting this summer, Netflix subscribers can stream movies to the 3DS. Nintendo's also going to operate a short-form video service to distribute 3-D movie trailers, music videos and comedy shorts to the device.

A Web browser will be added, and 3DS owners will get free Wi-Fi access on AT&T hot spots.

The 3DS also can be used to connect and play with nearby 3DS units, if parents haven't locked the device down with its parental control system.

There's also a pedometer that tracks steps when the device is closed but powered on.

You would think the pedometer data would sync to the hugely popular Wii Fit game, but it doesn't.

This is one of several opportunities that Nintendo missed to have the 3DS work wirelessly with the Wii. Nor can you transfer "Mii" avatars that you've already created on the Wii onto the 3DS.

Perhaps Nintendo is holding those features back for the next version of the Wii, which some have speculated could be announced this summer.

It presumably will have 3-D capabilities, giving game developers another platform for the experience they're getting with the 3DS, and Nintendo another outlet for its upcoming 3-D entertainment channel.

Nintendo said production hasn't been significantly affected by the disaster in Japan. The tragedy puts the importance of games and gadgets in perspective but perhaps there's no better time for a Japanese company to show that it can see fun in the future.

Here's a picture I took at last June's E3 game conference of the line to see the 3DS, which was unveiled at the event:

Here are the full specs of the 3DS, as listed by Nintendo:

Included in Hardware:
- Nintendo 3DS system
- Nintendo 3DS charging cradle
- Nintendo 3DS AC adapter
- Nintendo 3DS stylus
- SD Memory Card (2GB)
- AR Card(s) (view the cards using the outer cameras to play supported AR games)
- Quick-Start Guide
- Operations Manual (including warranty)

Characteristic Features:
- 3D screen, enabling 3D view without the need for special glasses and the ability to adjust or turn off 3D effect with the 3D Depth Slider.
- Stereo cameras that enable users to take 3D photos that can be viewed instantly on the 3D screen.
- New input interfaces including the Circle Pad, motion sensor, gyro sensor
- SpotPass, a feature that lets Nintendo 3DS detect wireless hotspots or wireless LAN access points and obtain information, game data, free software, videos and so on for players even when the system is in sleep mode.*
- StreetPass, a feature that lets Nintendo 3DS exchange data automatically with other
Nintendo 3DS systems within range, even in sleep mode once this feature is activated by
the user. Data for multiple games can be exchanged simultaneously.
- Features that users can access without stopping game play such as the HOME menu, Internet Brower, Notifications, etc.
- Built-in software such as the Nintendo 3DS Camera, Nintendo 3DS Sound, Mii
Maker, StreetPass, Mii Plaza, AR Games, Activity Log, Face Raiders, etc.
Nintendo eShop where users can view trailers, software rankings and purchase software.
- System Transfer which enable users to transfer already purchased software from one
Nintendo 3DS system to another. DSiWare purchased for the Nintendo DSi or the Nintendo DSi XL can also be transferred into a Nintendo 3DS system.**
- Compatibility functions where both new software designed for Nintendo 3DS and most
software for the Nintendo DS family of systems can be played.
- Parental Controls which enable parents to restrict game content by ratings as well as use of specific wireless connectivity, 3D functionality, etc.***
*Some of these features may not be available at launch
**There is a limit to how many times transfers can be made. Some software may not be transferred.
***Additional features added through system updates may also be subject to Parental Controls.
Some of these features such as the Internet browser, Nintendo eShop, system transfer and the ability to download software and videos using SpotPass will be available after system updates are performed.

Size (when closed): 2.9 inches high, 5.3 inches long, 0.8 inches deep.

Weight: Approximately 8 ounces (including battery pack, stylus, SD memory card).

Upper Screen: Wide-screen LCD display, enabling 3D view without the need for special glasses. Capable of displaying approximately 16.77 million colors. 3.53 inches display (3.02 inches wide, 1.81 inches high) with 800 x 240 pixel resolution. 400 pixels are allocated to each eye to enable 3D viewing.

Lower Screen: LCD with a touch screen capable of displaying 16.77 million colors. 3.02 inches (2.42 inches wide, 1.81 inches high) with 320 x 240 pixel resolution.

Cameras: One inner camera and two outer cameras. Resolutions are 640 x 480 for each camera. Lens are single focus and uses the CMOS capture element. The active pixel count is approximately 300,000 pixels.

Wireless Communication: 2.4 GHz. Enabling local wireless communication among multiple Nintendo 3DS systems for game play and StreetPass. Enabling access to the Internet through wireless LAN access points (supports IEEE802.11 b/g with the WPA™/WPA2™ security feature). Recommended distance of wireless communication is within 98.4 feet. This can be shorter depending on the enviromental
situation. WPA and WPA2 are marks of the Wi-Fi Alliance.

Input Controls: Input controls are the following:
- A/B/X/Y Button, +Control Pad, L/R Button, START/SELECT
- Circle Pad (enabling 360-degree analog input)
- Touch screen
- Embedded microphone
- Camera
- Motion sensor
- Gyro sensor

Other Input Controls: Other input controls are the following:
- 3D Depth Slider (enabling smooth adjustment of the 3D level effect)
- HOME Button (brings up the HOME menu)
- Wireless switch (can disable wireless functionality even during game play)
- POWER button

Connector: Connector includes:
Game Card slot
SD Card slot
Cradle connector
AC adapter connector
Audio jack (stereo output)

Sound: Stereo speakers positioned to the left and right of the top screen (supports virtual surround sound).

Stylus: Telescoping stylus (approximately 3.94 inches when fully extended).

Electric Power: AC adaptor (WAP-002 [USA]). Nintendo 3DS Battery Pack (lithium ion battery) [CTR-003].

Charge Time: About 3.5 hours

Battery Duration: When playing Nintendo 3DS software about 3-5 hours. When playing Nintendo DS software about 5-8 hours. Battery duration differs depending on the brightness setting of the screen. The information regarding battery duration is a rough standard. It can be shorter depending on what functions of the Nintendo 3DS system are used.

Game Card: Nintendo 3DS Game Card. The size is approximately the same as Nintendo DS Game Card.

Microsoft's touting blowout sales of its Xbox 360 console.

The company sold 535,000 systems in February in the U.S. Microsoft said it was the best non-holiday month (meaning other than October, November or December) ever for the Xbox.

This beat even the crazy month in September 2007, when "Halo 3" was launched, NPD noted in its monthly report on U.S. game sales. This follows yesterday's disclosure that 10 million Kinects were sold since its November launch.

February seems like an odd month for a surge of Xbox sales. Group Manager David Dennis said there was pent-up demand after supplies ran low in December and January, and there was also a "viral effect" as people tried systems that others received in the holidays.

"As we kind of replenished stock back in February, people were still interestd in Kinect," he said.

A big seller last month was the 250 gigabyte Xbox system bundled a Kinect sensor (for $400), but Sony's PlayStation 3 and Nintendo's Wii also saw sales grow during the month, NPD said.

Altogether physical sales of video game products grew 4 percent during the month, to $1.33 billion.

The console business was up 12 percent, while the portable game player business fell 27 percent (perhaps because buyers are waiting for the Nintendo 3DS).

Hardware sales were up 10 percent, to $426.4 million, and accessories were up 22 percent to 210 million. Game sales - which doesn't include downloads - fell 8 percent.

"Call of Duty: Black Ops" continued to lead game sales, becoming the best-selling game in history, a spot previously held by Wii Play.

Total retail spending on the Xbox platform -- including hardware, software and accessories -- was $475 million in the month.

Nintendo issued a releasing saying that it sold 454,000 Wii consoles in February, pushing the total to more than 35 million sold in the U.S. since its launch.

Here are the top-selling games:

A new Seattle game studio started by veterans of "Halo" creator Bungie Studios is presenting its first game this week at the Pax East conference in Boston.

Moonshot Games has five employees, three in Seattle and two in Boston, according to co-founder Michel Bastien, a former Bungie producer and vice president at Web tracking service Fyreball.

Other Bungie vets who co-founded the company include Damian Isla and Rob Stokes.

At Pax, it's showing "Fallen Frontier," a Halo-esque scrolling shooter with a sci-fi theme and top-notch graphics. Angry Stormtroopers?

Moonshot hopes to release the game in the first half of 2012, perhaps on the Xbox Live Arcade, Steam and PlayStation Network. Bastien said the game doesn't yet have a publisher.

Sony has high hopes for the next big shooting game from its Redmond studio, Zipper Interactive.

It's launching "Socom 4: U.S. Navy Seals" on April 19, extending Zipper's venerable franchise, which has sold more that's sold more than 12 million copies.

"Socom 4" can be played online with up to 32 players at once and can run in full definition 3-D.

One effect of the 3-D is that game information appears to be displayed on a glass pane in the foreground, like a heads-up display in a cockpit, that gets spattered with blood as the player is injured.

"Socom 4" also works with Sony's "Move" motion controller and showcases its precise aiming capability, an edge Sony needs to compete with Microsoft's Kinect system. The game was supposed to launch with Move last fall but the release was delayed to give Zipper more time to polish and tune the game.

Players work with a small squad and international forces, blasting through a vivid Southeast Asian setting that destructs as the action unfolds.

"I think this really brings immersion to a new level," Travis Steiner, lead designer at the 150-person studio, said during a preview event Wednesday.

The game also received an improved system of squad control, with simplified commands for issuing commands during battle.

Here are a few new screenshots:

A burst of sales in December wasn't enough to make 2010 a growth year for the video game industry, which saw sales fall 6 percent to $18.58 billion, according to NPD.

The biggest drop was in game hardware sales, which fell 13 percent compared to 2009, to $6.29 billion.

Apparently people are making do with their hardware, and just buying more games.

Game content sales - including retail packages plus mobile, rentals, social and downloaded games - were $15.4 to $15.6 billion - "flat to down by as much as 1 percent when compared to 2009," according to the firm's preliminary estimate of U.S. sales.

The top five games of the year were "Call of Duty: Black Ops," "Madden NFL '11," "Halo: Reach," "New Super Marios Bros." and "Red Dead Redemption."

PC games and packaged games at retail sold especially well, increasing 3 percent during the year. PC games rose 62 percent by dollar volume in December, pushed up by "World of Warcraft: Cataclysm" expansion pack. For the year, "Cataclysm" and "Starcraft II: Wings of Liberty" were the best-selling PC games.

Also gaining were sales of used games, downloads, mobile gaming apps and social network gaming, which offset declines in console and handheld gaming, NPD said in its release.

The console malaise didn't hurt Microsoft, apparently. The Redmond company crowed about the report, noting that Xbox 360 was the fastest-growing current-generation console in 2010, with 42 percent year-over-year growth.

December was also the best month ever for Xbox hadware sales, although Nintendo still sold more DS handhelds in the month, bringing total DS sales to more than 47 million in the U.S., NPD reported.

Nintendo said Wii sales are now over 34 million and the company has "strong momentum heading into 2011" with the 3DS going on sale in March.

"Nintendo has sold more game systems than anyone else for five years running," Charlie Scibetta, Nintendo of America's senior director of corporate communications, said in a release.

"Of the quarter billion hardware systems sold in the United States during the past 10 years, Nintendo sold more than half. We look forward to bringing fun new experiences to consumers when Nintendo 3DS launches in March."

Consumers spent $6.3 billion on the Xbox 360 platform last year, more than any other current-generation console, according to a selective preview of the NPD report that Microsoft issued earlier today.

Microsoft won't report last quarter's earnings until Jan. 27, but the company has been saying that 2010 was a blowout year for Xbox. Last week Chief Executive Steve Ballmer announced that 50 million Xbox 360 consoles have been sold and 8 million Kinect sensors were sold in its first 60 days on the market.

NPD said Kinect has been the best-selling game accessory since its launch in early November.

Microsoft's expecting the sales growth to continue in 2010.

"We expect to sell more consoles next year than we sold this year," said David Dennis, Xbox group product manager.

Dennis said the business is breaking the usual pattern, of releasing a console and then having sales taper off later in its life cycle.

"What you're seeing with our platform is something that hasn't been seen before, the mid-cycle acceleration," he said.

Here is the list of the top 10 games sold in the U.S. last year:

Here's a video, via the LA Times, of USC researchers using a hacked Kinect to play "World of Warcraft."

Boosted by the Xbox 360 Kinect launch, November broke a record for video game sales, with $2.99 billion worth of games and hardware sold in the U.S., according to NPD's monthly report.

The Xbox 360 platform accounted for 40 percent of the total industry sales during the month. Xbox accessories -- namely Kinect -- accounted for 60 percent of game accessory sales, the research firm reported.

Altogether game sales were up 9 percent in the month.

Full-year sales of physical games - which account for about 70 percent of game spending and don't include digitally disributed games and mobile apps - should reach $18.8 billion to $19.6 billion, NPD predicts.

"The higher end of that range would essentially be flat to last year. Gains in November offset a good portion of the year-to-date declines," NPD analyst Anita Frazier said in the release.

Nintendo announced that it sold more than 2.7 million game systems in the month - 1.2 million Wiis and 1.5 million DS handhelds per NPD.

"According to our internal numbers, Nintendo sold 600,000 Wii systems during Thanksgiving Week alone, an increase of 50,000 over 2009," Charlie Scibetta, Nintendo of America's senior director of communications, said in the release.

"Call of Duty: Black Ops" was the best-selling game with 8.4 million units sold. It accounted for 25 percent of all games sold in the U.S. last month. The top 10 games sold during the month:

Call of Duty: Black Ops (360, PS3, Wii, PC, NDS)
Assassin's Creed: Brotherhood (360, PS3)
Just Dance 2 (Wii)
Madden NFL 11 (360, PS3, Wii, PS2, PSP)
Fable III (360)
Donkey Kong Country Returns (Wii)
Need for Speed: Hot Pursuit (PS3, 360, Wii, PC)
Gran Turismo 5 (PS3)
NBA 2K11 (360, PS3, Wii, PS2, PSP,PC)
Wii Fit Plus (Wii)

NPD noted that it is now lumping multiplatform games together; if it was reporting titles individually by platform, "Halo: Reach" would have been tenth.

When games are ranked individually by platform, two Kinect titles almost made the top 10. "Dance Central" and "Kinect Sports" were number 11 and 12, according to David Dennis, Xbox group product manager.

"We're very happy with performance across all lines of our business," he said.

Activision today announced even more amazing sales records for Vietnam-era shooter "Call of Duty: Black Ops."

The game grossed $650 million in its first five days, blasting sales records for video games, theatrical movie releases and books. It also beat the $550 million, five-day take of the last edition, "Call of Duty: Modern Warfare 2."

Microsoft chimed in on the release, saying that "Black Ops" set new records on Xbox Live, with more than 5.9 million multiplayer hours and more than 2.6 million unique players on the service since the game's Nov. 9 launch.

The showing "illustrates the mass appeal of interactive entertainment as millions of consumers are choosing to play 'Call of Duty: Black Ops' at unprecedented levels rather than engage in other forms of media," Activision Chief Executive Robert Kotick said in a release.

It's not necessarily either-or though.

I was able to read the newspaper a bit while different levels loaded and during an overly long soliloquy by Viktor Reznov, the mysteriously invincible Russian in the series. Some players may also end up watching more romantic comedies than planned, as penance for spending too much time in virtual Indochina.

Steve Jobs finally landed the Fab Four, and now Microsoft may get the Bizarre 200. Or some of them, perhaps.

Gaming mag Develop is reporting that Microsoft has expressed interest in acquiring Liverpool, England, game studio Bizarre Creations. Or it may just be interested in picking up some of its 200 employees, who are being sacked by parent company Activision.

Bizarre created one of the early hits for the Xbox, the "Project Gotham Racing" franchise. This image is from PGR4, which was released in 2007 and gave players ultra-realistic road racing mixed with classics like sliding around Nurburgring in a Maserati 250F.

But its most recent title, "Blur," wasn't much of a success and news surfaced Tuesday that Activision was closing the studio.

A Bizarre source told Develop that the situation was looking up after a staff meeting today, when word of possible new owners emerged.

"Microsoft aren't stupid," the source told Develop, "They know we're talented and have spoken to Activision about us."

Xbox spokesman David Dennis declined to comment, saying the company won't comment on "rumors."

Microsoft's Kinect is connecting at the cash register. The company today said that it sold 1 million of the $150 controllers for the Xbox in its first 10 days on the market.

This follows news from England that the arrival of Kinect and "Call of Duty: Black Ops" last week combined to give game sellers in the United Kingdom their highest grossing week of all time.

With Black Friday and the real holiday selling season still to come, Microsoft is now suggesting it may beat its goal. Earlier this month it upped the forecast from 3 million to 5 million by year's end. Now it's talking about selling more than 5 million.

In today's announcement, Don Mattrick, president of the Interactive Entertainment Business, said the company is going to "keep pace with high demand and deliver against our plan to sell more than 5 million Kinect sensors worldwide by the end of this year."

Kinect went on sale in the U.S. on Nov. 4 and in Europe Nov. 10. It launches in Asia next week. Microsoft expects the system to be available through 60,000 retailers in 38 countries by the holidays. (Here's my Kinect review.)

Now it's time for Microsoft to tell us how many Windows Phone 7 devices were sold in its launch week.

PopCap Games is big in Japan, and getting bigger.

The Seattle-based company today said it's launching a mobile, social game service for the Japanese market. Called "Pop Tower," a joint venture with Square Enix subsidiary Taito Corp.

Pop Tower is part of an Asian blitz by the 10-year-old company, which first established the viability of the Seattle-centered casual games business with its breakout hit "Bejeweled."

PopCap opened an Asia-Pacific office in Shanghai in 2008. That led to big projects in the region's largest markets. In August PopCap disclosed plans to partner with RenRen, one of China's largest social networking sites, and in September it announced plans for a Korean multiplayer game service -- PopCap World -- that will be offered with NCsoft.

Pop Tower will include custom, social versions of games such as "Bejeweled," "Chuzzle" and "Zuma" that will be tied together in an entirely new metagame with role-playing game elements, designed for Japanese players.

PopCap previously sold more than 1 million copies of its mobile games in Japan but hasn't previously offered a mobile, social game.

Social games on mobile devices looks set to dominate gaming worldwide and Japan is already ahead of the curve," James Gwertzman, PopCap's vice president for Asia/Pacific, said in the release.

He said the company may use what it learns in Japan to offer mobile, social games internationally.

Today's column in the paper is a review of Microsoft's Kinect. It follows a Monday story focused on project lead Alex Kipman, the Brazilian who code-named the system Project Natal after the city where he used to spend summers.

(The stories were staggered in part because Microsoft, as part of its hyper structured launch program, wouldn't provide test gear to news organizations unless they promised to hold reviews until 9 p.m. Wednesday or midnight eastern time, when the consoles first went on sale. Oprah and Ellen didn't count.)

The review, with some photos added:

Sometimes the intense sights and sounds of modern video games stay with you, like scenes from a great movie.

After you're done hopping and waving in front of the TV screen, long-forgotten muscles will remind you of the fun you had with the $150 gadget.

Here's another way to level the playing field with China, besides getting the country to stop manipulating its currency:

Get Microsoft to start selling Xbox 360 consoles in the country, pre-loaded with "Halo: Reach."

In the six days after "Reach" launched last week, players spent 5,901 man years playing the game online, according to "Halo" creator Bungie.

That doesn't include the millions of hours people spent playing the game's campaign offline, and the hours (or days?) of reduced productivity at work the following mornings.

Bungie also reported yesterday that more than 70 million online "Reach" games have been played. The game's online population surpassed that of "Halo 3," beating its all time record of concurrent players by 65 percent.

Bungie's stats were a sort of rebuttal to the Xbox Live weekly play report that showed "Call of Duty: Modern Warfare 2" still had more unique users on the service the week of Sept. 13-19, but "Reach" wasn't available the full week.

Xbox's Larry Hryb - who caused a kerfluffle when the numbers came out this week with an error - yesterday afternoon provided an update, saying that "Reach" was the top game on Xbox Live for the past seven days with nearly four times the unique users as "Halo 3" had the week of Sept. 13.

China banned the sale of the Xbox 360 and other consoles, fearing they will waste the minds of its youth, who instead are avid players of online PC games and gray market consoles.

But that's not stopping Chinese computer giant Lenovo from developing an Xbox Kinect knock off called the eBox for its home market.

Maybe it's time for Bungie to show the WTO how to set up a Banhammer anti-cheating system. One reason the hammer comes down: "Manipulating network conditions to give yourself an advantage, or to the detriment of the experience for other players."

Here's my take on the Sony Move for the PlayStation 3.

In short, it's pretty fun and has potential for action games. Teens and older players may prefer it over the Wii if given a choice. It's a nice addition to the mix of motion-control systems available this year.

But the Move requires more fussing than expected, including frequent calibration. Using the Move with an on-screen keyboard is also tedious and challenging.

It's also expensive to get started, if you don't already have a PS3. But there's a big variety of games available and in the pipeline so Move probably won't have as slow a start as the console did when it first launched.

Today's column:

It's strange and cruel to have the most amazing toys arrive when we can least afford them.

This happened during the Depression, when Bugatti and Alfa Romeo blended gorgeous design and bleeding-edge technology to produce the greatest sports cars in history.

It began Sunday when Sony released the Move for the PlayStation 3.

Microsoft tonight announced that "Halo: Reach" sales grossed $200 million in its first day, making it the best-selling game in the company's history.

"'Halo: Reach' is the biggest game Microsoft has ever released and its launch has already surpassed every game, movie and entertainment launch this year," Phil Spencer, vice president of Microsoft Game Studios, said in the release.

The total includes U.S. and European sales. For comparison, "Halo 3" sold $170 million in the U.S. alone on its first day in 2007.

It is an amazing number for Reach, especially ahead of the holidays and during a down economy.

But bragging rights may only last until Activision releases "Call of Duty: Black Ops" in November for the Xbox 360 - plus the PlayStation 3 and Wii. The last version in 2009 sold $310 million in its debut on multiple platforms in the U.S. and U.K. I wonder how Reach would have done if it wasn't an Xbox exclusive.

As part of its effort to build up its GameHouse platform, RealNetworks today bought a social-games company in Victoria, B.C.,

Backstage Technologies -- which worked on the Facebook version of "Family Feud" -- has expertise engineering and monetizing games for social platforms, Real said in its release.

The purchase price wasn't disclosed; Real said it won't materially affect Real's sales or earnings in 2010.

Real Chief Executive Bob Kimball's release quote:

"As we transform RealNetworks, we will focus on areas with strong revenue growth and profit potential that will realize the value of our core businesses. The most compelling growth opportunity in games today is social games, and this acquisition is part of our commitment to make our entire GameHouse business social."

Backstage has 18 employees, who will remain based in Victoria. Its catalog includes "Pull Tabs," "Scratch and Win," "Slots" and "Vinyl City."

For tonight's launch of "Halo: Reach," Microsoft brought heavily armed Spartan soldiers to London, including one who flew over Trafalgar Square with a jetpack.

I wonder if they'll borrow a space fighter jet from Boeing to fly over the Experience Music Project at tonight's launch event, which begins at 6 p.m.

Here's a video of the London event; skip to the 2 minute point to go directly to the jetpack.

Sony on Thursday called out the 15th anniversary of the PlayStation, which will be marked by a series of promotions on the PlayStation Network.

It comes as Sony is about to launch the Move motion control system for the PlayStation 3, setting up a holiday sales battle with Microsoft's upcoming Kinect system for the Xbox 360.

Sony said it sold more than 377 million PlayStation consoles and more than 2 billion software units since the line debuted in 1995. In the U.S., PlayStation sales are more than $63 billion over the last 15 years, or about 40 percent of the overall video game market during that period, the company said in its release.

Peter Dille, senior vice president of marketing at Sony Computer Entertainment America, shared a few thoughts on the PlayStation's milestone and competition before getting his slice of cake.

Here are edited selections of the conversation:

Interesting sales statistics in the anniversary news release ...

"Another stat that jumps off the page -- when we got involved, the business was $2.5 billion; now it's close to $20 billion. It's amazing the growth we've seen. We'd like to think we've had a share in driving that growth."

How are you feeling about the Move vs. Kinect competition this holiday season, especially now that you've seen Microsoft's Kinect in action?

"Our perspective has become much more bullish as we get closer to launch. We've had a chance to get people playing our system ... The feedback we've gotten has been unanimous and tremendous. It's, 'I see what you mean about this precision thing.' Our pre-orders continually are ramping up with consumers, retailers want to get more product."

Do you expect a supply crunch with Move hardware?

"We're hopeful that it's a hot product. Based on the retailer feedback, they'd like to get more than they have at this point. That's a high-class problem to have."

What's going to be the biggest Move title?

"The title that we feel really represents the great spectrum of experiences is Sports Champions." [The game comes with the $100 Move starter bundle.]

Does this talk about the PlayStation brand signal more products coming soon -- maybe a new mobile device?

"No new mobile launches this year."

Will you be extending the brand to other company's hardware that runs PlayStation games?

"Our strategy is to maintain the PlayStation brand on Sony devices and provide experiences that are exclusive and proprietary."

How concerned are you about launching Move in the current economy? Will people be able to afford it?

"Every marketer in the country should be concerned and is conscious of the economy we're living in. Having said that, we know many families might have had to forgo the big expensive vacation; you may not put a second addition on the house, But what we also know is families are looking for value."

Are you going to promote it differently to reach more casual players?

"We'll be buying different media and showing up on programming you might not have seen."

Will you spend more this holiday season on marketing?

"Close to last year, but the mix is different."

Are you going to spend more promoting Move than Microsoft spends on Kinect?

"I don't think we'll ever outspend Microsoft."

How is the premium PlayStation Plus network doing?

"It's right in line with our expectations."

Any plans for more hardware price cuts this season?

"We're pretty comfortable with $299. We feel like it's a true sweet spot. Since we announced that last year, we've been challenged to keep the PlayStation in stock."

The PS3 seems to have turned the corner. Will Sony now start investing more in game development and maybe buying more studios?

"You can't buy a new studio every week."

How are you going to celebrate the PlayStation anniversary internally?

"Several big cakes. It's hard to make cake for 1,800 people."

Apparently kids bought school supplies instead of video games last month.

Or maybe they were saving money for "Halo: Reach" and other blockbusters coming soon.

The industry saw its worst August since 2006, with sales down 10 percent to $819 million, according to NPD's monthly report. Hardware sales were down 5 percent and software sales were down 14 percent.

Among the consoles that did sell, Xbox led the pack, with 356,700 units sold in the U.S. last month. Sony's PlayStation 3 sold 226,000 units and Nintendo sold 244,300 Wiis and 342,700 DS handhelds.

"Madden NFL 11" was the top-selling game, with the Xbox version taking first place and the PS3 version taking second. "Super Mario Galaxy 2" was third, followed by "Mafia II."

NPD analyst Anita Frazier expects 2010 sales will reach $18.6 billion to $20 billion, with a late boost from "Reach" and the new motion-control systems coming to the Xbox and PS3.

She noted in the release that the Wii had its softest month since its debut, while the Xbox and PS3 posted year-over-year gains. Xbox sales were down from July, though.

"That said, with 'Halo: Reach' coming to market next week, if hardware sales react in a similar fashion to what was experienced when 'Halo 3' was launched in September 2007, September could be a huge sales month for Xbox 360 hardware," she said in the release.

Frazier noted that there are about three times as many Xbox 360s compared with the launch of "Halo 3" "so the potential audience for 'Reach' is significantly larger."

"Between the size of the potential audience, the quality of the game previews, and the hefty marketing program behind the game, we can expect big numbers to be reported with September results," she said.

The Entertainment Software Association will honor Robbie Bach, the retiring president of Microsoft's entertainment and devices business and supreme Xbox commander, during an Oct. 20 event in San Francisco.

Bach is being honored "for his steadfast and long-term commitment to improving the lives of America's children," the ESA said in its release, noting Bach's charitable work. The Medina resident is chairman of the Boys & Girls Clubs of America national governing board and led the creation of Get Game Smart, an educational campaign aimed at families.

The ESA will present its "Champion Honoree" award to Bach during the group's annual charity dinner and auction. Previous winners include George Lucas; Nintendo's Shigeru Miyamoto and Howard Lincoln; Electronic Arts' Bing Gordon and Sony Computer Entertainment's Ken Kutaragi.

Tickets are $750.

More details are emerging about the horrible accident Friday on Whidbey Island, where a Chevy Blazer crossed the center line when, according to police, the driver took off a sweater and asked a passenger to steer.

The Blazer collided with a Subaru Outback wagon driven by Brian Wood, a designer at THQ's Relic Entertainment studio in Vancouver, B.C. Wood, 33, was senior designer of its "Company of Heroes" franchise.

Wood saw the Blazer coming, braked and swerved slightly, putting himself in the path of the truck and saving his pregnant wife, Erin, according to a moving report published today in the Vancouver Province.

"All the policeman say that if we had hit the car head-on all of us would be dead," she told the paper."At the very last second [Brian] braked really hard and turned right so that he would be put in the path of the SUV and not me and the baby, and that is the only thing that saved us both."

Microsoft is crowing over the monthly NPD report on U.S. video-game sales, which show a 118 percent jump in Xbox console sales during July.

That was the most dramatic gain in a month when overall game sales were down 1 percent, to $846.5 million. July's usually relatively slow but hardware sales were 12 percent higher than July 2009, while game software sales were down 8 percent.

Microsoft sold 443,500 consoles, more than double sales in July 2009.

"It's a great position to be in and this isn't really even our busy season," Xbox spokesman David Dennis said.

Xbox also beat July sales of Nintendo's Wii (253,900), Sony's PlayStation 3 (214,500) and even Nintendo's DS (398,400).

But don't read it as a new trend. The Xbox sales were helped by a launch bounce that may not happen again until the Kinect goes on sale in November.

Xbox sales in July were boosted by the release of the new slimmer and quieter model (shown, with Kinect). Retailers also slashed the price of the previous consoles, which could be had for under $150 during July.

Sony had the same launch effect last September, when PS3 sales doubled after a $100 price cut and the release of a slimmer model. The company sold 491,800 units that month.

Microsoft also cleaned up in the game accessory category, where the 1600 point Xbox Live card was the best-selling accessory for the fifth month running.

Another bright spot for the month was PC games, which rode the success of "Starcraft II" to a 103 percent gain, dollar-wise.

Apparently anticipating Microsoft's shining in the closely watched NPD report, Nintendo on Tuesday talked up Wii sales. It said 30 million units have been sold in the U.S. since its launch in November 2006.

Nintendo said that "further establishes Wii as the fastest-selling console in the history of the industry, reaching this milestone 15 months faster than the next best-selling console."

Sony also issued a statement today on the NPD report, noting that PS3 console sales have posted monthly sale gains for 12 consecutive months. They're up 76 percent since July 2009 and 45 percent year-to-date in the U.S.

Here are the top 10 games for the month:

NCAA FOOTBALL 11 - 360
NCAA FOOTBALL 11 - PS3
CRACKDOWN 2 - 360
SUPER MARIO GALAXY 2 - WII
LEGO HARRY POTTER: YEARS 1-4 - NDS
RED DEAD REDEMPTION - 360
LEGO HARRY POTTER: YEARS 1-4 - WII
DRAGON QUEST IX: SENTINELS OF THE STARRY SKIES - NDS
NEW SUPER MARIO BROS. WII - WII
CALL OF DUTY: MODERN WARFARE 2 - 360

Here are new screenshots of "Halo: Reach" that we couldn't fit in the paper with today's story on the game, plus a link to a trailer video.(This will be my last Halo post for a little while ...)

Forking around:

Shooting from the sky:

Shooting in the sky:

Vehicles like the Warthog have more detail:

A cinematic shot of the squad - more "real" soldiers this time:

The Banshee:

The Pelican:

It's a blast:

Here are excerpts from my interview with Bungie's Marcus Lehto, "Halo Reach" creative director, that led to today's story on the game coming out Sept. 14.

Q: You've got more women in the game. Was that a business decision to reflect the market, or influenced by developers with female players in their families?

A: We always want to be sure we're trying to be as inclusive as possible with players. That's one of the reasons in player customization you can choose a real female Spartan now, and choose a real female voice to go with her, and kit her out just like you would male Spartans. You can do some really neat stuff there, and it's really cool too, because contextually all the characters speak to you appropriately then with regards to your gender, in cinematics and also in gameplay itself.

Q: That's new - to have gender-appropriate cinematics even?

A: Yes, that's something I really pushed for on this project. I wanted to make sure both male and female were treated equally as far as player character was concerned and you could really open up the audience, hopefully, to a broader group of folks.

Q: When you make a decision like that, how much is driven by business and marketing decisions about getting X more players?

For a quick fix until "Halo: Reach" arrives on Sept. 14, take a look at "Halo 2600" - a free online version of the game, as if it were released for the Atari 2600.

It's the best thing since Google Pac-Man.

Ed Fries, the former head of Microsoft Game Studios, built the game as a hobby - partly to see if he could still build games on the platform that launched his career.

Back in his Sammamish High School days, Fries was given an Atari console for Christmas. It inspired him to start programming, first in Basic and then assembly language.

The breakout was a "Frogger" clone he made called "Froggy" that went viral, after he shared it with a few friends. In 1981, when Fries was a junior, a game publisher from California tracked him down and showed up with a contract offer.

After doing a few other things since his 2004 retirement from Microsoft, Fries read "Racing the Beam," a book about programming for the Atari 2600 and started in on "Halo 2600."

As Fries explained on the Halo 2600 Facebook page, the trick with Atari programming is that the machine only had "128 bytes of RAM and without bank switching the maximum program size is just over 4000 bytes."

Fries said he thought it will appeal mostly to the small community of Atari programming enthusiasts who stay in touch through sites like Atariage.com.

"I thought these guy will care but probably no one else will," he said in a phone interview.

But "Halo 2600" is suddenly getting all sorts of attention, after being written up by most major gaming sites. So far there are no plans to commercialize the game.

How about putting in Xbox Live Arcade? "If they want to do it, they're welcome," Fries said.

Fries isn't too worried about being hassled by copyright lawyers from Microsoft or Bungie, the Kirkland studio that created the "Halo" franchise. He kept both in touch as the project evolved.

He mentioned the game to Robbie Bach, Microsoft's president of entertainment and devices, when they had coffee recently.

"I gave him a chance to complain,'' Fries said. "He just laughed and thought it was funny."

If it weren't overcast today, you might have seen a Big Fish on top of Mount Rainier.

That would be Alexey Tugaenko, a developer of games for Seattle's Big Fish Games.

Tugaenko won a contest that Big Fish held for the best third-party game released on the site between July 2009 and March 2010. His Top Evidence Studios in Kiev, Ukraine, won for producing the hit "Haunted Manor: Lord of Mirrors."

The prize was a climb to the top of Rainier with famed climber Ed Viesturs, a Bainbridge Island resident who is also the keynote speaker at next week's Casual Connect game conference in Seattle.

They reached the summit this morning at 7 a.m., after starting out on their climb Thursday morning.

Here are Viesturs, Tugaenko and RMI guide Mike Uchal in a photo courtesy of Viesturs:

Sales of video game software in the U.S. fell 15 percent to $531 million last month, according to the monthly NPD report.

But that was offset partly by sales of game consoles, including big gains for Microsoft's Xbox 360 and Sony's PlayStation 3. Game hardware sales were up 5 percent to $402 million. The number of console units sold was up 35 percent in the month.

Total industry sales during June were $1.1 billion, down 6 percent. But NPD analyst, Anita Frazier, is expecting the year to end with a bang and may match last year's $20 billion in sales.

"Given the strong slate of content still to come, and the release of the Move and Kinect controllers, which I believe will spark additional interest in gaming, I think we could see the total year new physical retail sales come in at $20 billion," she said in NPD's release.

The best-selling accessory last month was the Xbox 360 1,600 point card.

Here are the top 10 games sold in the U.S. last month. Notably missing is the new Tiger Woods PGA Tour 11 game, which sold 68 percent fewer copies than last year's edition did in its first month, NPD said in the release.

RED DEAD REDEMPTION - 360
SUPER MARIO GALAXY 2 - WII
RED DEAD REDEMPTION - PS3
NEW SUPER MARIO BROS. WII - WII
JUST DANCE - WII
WII FIT PLUS W/ BALANCE BOARD - WII
TOY STORY 3 - NDS
UFC 2010: UNDISPUTED - 360
LEGO HARRY POTTER: YEARS 1-4 - WII
UFC 2010: UNDISPUTED - PS3

Here are June's game hardware sales by unit:

PS3 304,800
PSP 121,000
Xbox 360 451,700
Wii 422,500
DS 510,700

Zombie Studios' action shooting game "BlackLight: Tango Down" is debuting on Xbox Live today, the start of a multimedia media franchise for the venerable Pioneer Square company.

Highlights of the game -- which is being pitched as a blend of "Blade Runner" and "Call of Duty" -- are its weapon customization system and a "hyper reality visor" imaging system loosely based on systems used by real soldiers.

"BlackLight" is being sold for $15 as a downloadable game on Xbox Live Arcade. Versions for the PlayStation 3 and PC will appear in a few weeks on PlayStation Network and the Games for Windows Live service.

What's most notable about "BlackLight" may be its business development. Even before the game was done, Zombie reached deals to produce "BlackLight" comic books and a movie being developed by 20th Century Fox.

Zombie has been making military-themed games since it began in 1994, including the government-funded "America's Army." Chief Executive Mark Long is a retired major who worked in military research and development before entering the game business.

"BlackLight" won a few kudos from critics at the E3 show last month in Los Angeles, but didn't make it into the upper tier that won coveted Game Critics Awards chosen by 31 publications.

Bellevue's Valve was the local champion, with its "Portal 2" winning "Best PC Game" and "Best Action/Adventure Game."

Nintendo's 3DS -- the 3-D version of its DS handheld game system -- won best of show and best hardware, beating Microsoft's Kinect and Sony's Move controllers.

The Northwest can also lay claim to the best sports game of the show - NBA Jam, which was devleped by Electronic Arts Canada in Vancouver, B.C.

Other Game Critics Awards:

Best Original Game
"Dance Central" (Harmonix/MTV Games/Microsoft for Xbox 360)

Best Console Game
"Rage" (id Software/Bethesda for PC, PS3 and Xbox 360)

Best Handheld Game
"God of War: Ghost of Sparta" (Ready at Dawn/Sony Santa Monica for PSP)

Best Action Game
"Rage" (id Software/Bethesda for PC, PS3 and Xbox 360)

Best Role Playing Game
"Star Wars: The Old Republic" (BioWare Austin/LucasArts/EA for PC)

Best Fighting Game
"Marvel vs. Capcom 3: Fate of Two Worlds" (Capcom for PS3 and Xbox 360)

Best Racing Game
"Need for Speed Hot Pursuit" (Criterion Games/Electronic Arts for PC, PS3 and Xbox 360)

Best Strategy Game
"Civilization V" (Firaxis/2K Games for PC)

Best Social/Casual Game
"Rock Band 3" (Harmonix/MTV Games/Electronic Arts for PS3, Xbox 360, and Wii)

Best Motion Simulation Game
"Dance Central" (Harmonix/MTV Games/Microsoft for Xbox 360)

Best Online Multiplayer
"Assassin's Creed: Brotherhood" (Ubisoft Montreal/Ubisoft for PC, PS3 and Xbox 360)

Special Commendation for Graphics
"Rage" (id Software/Bethesda for PC, PS3 and Xbox 360)

Video game sales in the U.S. fell 5 percent to $823.5 million last month, but it was still the industry's third best-selling May on record, NPD said in its monthly report this month.

Console sales were flat and sales of handheld players fell. Overall hardware sales were down 20 percent while game software sales rose 4 percent.

But the Xbox 360 and PS3 platforms were strong, with the Xbox contributing the biggest share of industry sales so far in 2010. Sony's PlayStation 3 saw the biggest percentage growth, with sales of hardware, software and accessories up 32 percent in May.

Nintendo hardware outsold them both, though, moving 334,800 Wiis and 383,700 DS handhelds, compared with 194,600 Xboxes, 154,500 PS3s and 59,400 PlayStation Portables.

"Red Dead Redemption" on the 360 was the top selling game with 945,900 units sold last month. The top 10:

RED DEAD REDEMPTION - 360
RED DEAD REDEMPTION - PS3
SUPER MARIO GALAXY 2 - WII
UFC 2010: UNDISPUTED - 360
UFC 2010: UNDISPUTED - PS3
WII FIT PLUS W/BALANCE BOARD- WII
NEW SUPER MARIO BROS. WII - WII
ALAN WAKE - 360
POKEMON SOULSILVER VERSION - NDS
SKATE 3 - 360

Microsoft and Sony sent boasts to accompany the report. Samples:

Microsoft: "Xbox 360 continues to outsell the PlayStation 3 at retail for the fifth consecutive year and every single month of 2010. ... Half of May's best-selling console titles are on Xbox 360."

Sony: "In May, we experienced our tenth consecutive month of year over year growth, and it is clear that the demand for PlayStation 3 and its incredible content is not subsiding as evidenced by an increase of 18% in PS3 hardware sales and revenue increase of 58% in PS3 software sales since last May."

If you've lost interest in the World Cup and can't wait for the next Olympics, perhaps Nintendo's new Wii Games: Summer 2010 can fill the void.

The game company is holding a national competition in five Wii sports, culminating in a championship event in Los Angeles from Sept. 3 through 5. One of the regional qualifiers takes place at Northgate Mall in August.

Activities include "Wii Sports Resort" basketball and bowling; the "Wii Fit Plus" Hula Hoop challenge; New Super Mario Bros. Wii; and Mario Kart Wii.

There are different categories for kids, teens, adults, seniors and families. Contestants can pre-register now at the Wii Games site.

Olympic medalist Shawn Johnson is the games' "ambassador" and will appear at several of the regional competitions. They begin July 16 in New Jersey.

Prizes include Nintendo systems, home entertainment packages, trophies and a cruise.

Here's the Northgate event schedule:

8/13/2010 Times: 10:00 - 3:30 / 3:30 - 9:00
8/14/2010 Times: 10:00 - 3:30 / 3:30 - 9:00
8/15/2010 Times: 11:00 - 3:00 / 3:00 - 7:00

Here are the categories of competition:

Adult and Child (two players): Team consists of two team members, one of whom must be a child aged 6-12 and the other of whom must be either (a) the actual parent or legal guardian of the child or (b) 25 years of age or older.

Adult and Teen (two players): Team consists of two team members, one of whom must be a teenager aged 13-17 and the other of whom must be either (a) the actual parent or legal guardian of the child or (b) 30 years of age or older.

Teen (two players): Team consists of two team members, both of whom must be teenagers aged 13-17
.
Adult (two players): Both players must be adults aged 18 or older, with two possible exceptions:
1.Special Teen Step-Up Rule: A teenager aged 13-17 may compete in an Adult Team so long as the other team member is 18 years of age or older.
2.Special Super Adult Step-Down Rule: An adult(s) aged 55 or (older) may compete in an Adult Team
Super Adult (two players) - team consists of two (2) team members, both of whom must be 55 years or older.

Family (four players): Team consists of four (4) team members, two (2) of whom must be children aged 6-17 and at least one of whom must be either (a) the actual parent or legal guardian of at least one (1) of the children or (b) 35 years of age or older. Family participation is highly encouraged, however teammates do not need to be related.

LOS ANGELES -- Who are the hundred million mainstream families that Microsoft, Sony and Nintendo are chasing with new motion controllers, games and consoles revealed at this week's E3 conference?

They're not necessarily newcomers to video games. They may already have an older console and might be thinking about an upgrade, especially if they're going to buy a new TV.

That's according to PlayStation's Peter Dille, senior vice president of marketing at Sony Computer Entertainment America.

During an interview at the show, Dille described some of the nuances of the three-way battle between the companies.

For instance, he said Sony is hoping that its Move motion controllers will make the PlayStation 3 more appealing to families who bought a Wii a few years ago and now want to get more into gaming.

"If you look at someone who has had a Wii in their house, to me there is a more natural progression to our platform than the 360," Dille said. "You're probably talking about a family looking for entertainment, and the PS3 device is something that can deliver entertainment for the whole family. ... It's not just a platform that's got a lot of first-person shooters on it."

It costs as much as a console and doesn't sense gestures like Project Natal.

But game playing dads may still covet the new Ferrari Wireless GT Cockpit 430 Scuderia Edition controller from Thrustmaster.

The folding metal controller has 50 hours of battery life, 10 meters of range and weighs 23 pounds. It works with PCs and the PlayStation 3; a spokeswoman said there aren't currently plans for an Xbox version.

It also costs $250 (which btw could be $100 more than a Project Natal setup, according to a report saying Natals will go on sale around October 26 for $149 or $299 bundled with an Xbox 360 Arcade edition.)

Here's an edited version of a quick interview I had with Bungie President Harold Ryan on the Kirkland studio's new partnership with Activision Blizzard, giving the Activision exclusive rights to Bungie's next game after "Halo: Reach."

Did Microsoft make a bid to publish your new franchise?

We've been in discussions with Microsoft. We still continue to have a great relationship with those guys.

Ultimately for us the balance between being exclusive to either first party, whether it be Microsoft or Sony, to really engage with a globally engaged partner like Activision was a major component of not choosing Microsoft or Sony.

Will you move the studio to Santa Monica?

There is not a chance we'll move the studio to Santa Monica.

Will you share details of the new game before "Halo: Reach" goes on sale?

You should expect that were focused on Reach.

When will you release the new game?

It will be sometime. I know its going to knock everybody's socks off.

So, 2011 perhaps?

I wouldn't commit to a date.

Will your next franchise be bigger than "Halo"?

Absolutely.

Incrementally or exponentially?

Exponentially ... we've spent a lot of time laying out plans that took what we learned over the next 10 years.

Does Activision have exclusive rights to additional franchises developed by Bungie over the next decade?

This particular deal we're focusing on one franchise. There's potential for new franchises that we come up with for Activision.

Will this mean a big increase in employment at the studio?

We're going to continue to do what we've been doing since we left Microsoft (and work to) attract the best people in the industry. We're not currently planning to take on major acquisitions or anything that would drastically grow us.

Do you have enough resources to build multiple franchises at once now?

We have enough people to do two things at once but what we're planning for our next IP (intellectual property) is super aggressive and it's going to be the biggest thing ever.

Kirkland game studio Bungie, the creator of the hit "Halo" franchise for Microsoft, today announced a mondo publishing deal that will make Activision Blizzard the exclusive publisher of its next franchise for 10 years.

Bungie spent two years developing an entirely new game that will be released sometime after its "Halo" finale, "Halo: Reach" is released by Microsoft this fall.

A value wasn't placed on the deal, but the entertainment franchise at stake is likely to be worth more than $1 billion and consume millions of hours of people's time. Activision stock rose 3 percent, to close at $11.26 today.

Bungie's likely to release at least three titles in the new franchise, the first of which could go on sale in 2012, according to a research note by analyst Shawn Milne at Janney Montgomery Scott.

Microsoft -- and Sony -- were among the companies that made bids for Bungie's next title but the studio opted for a partner that would publish to all platforms, said Harold Ryan, Bungie president.

"We had agreed with Microsoft awhile ago to let them have first look at our game, so we did that," Ryan said. "But we retained the right to negotiate for the best deal for the studio."

Microsoft's games group issued a statement noting that it continues to have a relationship with Bungie as a developer for the Xbox 360.

"We're not at liberty to discuss details of Bungie's publishing agreements," the company said. "We respect Bungie's decision as an independent studio to develop games for multiple platforms."

Santa Monica, Calif.-based Activision is the top publisher of Xbox and PlayStation games in the U.S. and one of the top publishers worldwide. Its portfolio includes the biggest rival to "Halo," the "Call of Duty" franchise, but it's in a legal fight with studio Infinity Ward over "Call of Duty: Modern Warfare 2" bonus payments.

Bungie was started in Chicago in 1991 and moved to Kirkland after Microsoft bought the studio in 2000. They split in 2007, but Microsoft continued to publish the "Halo" franchise.

Now the 180-person studio has financial security and the backing of a top game company for the next decade. It also means the former Microsoft studio's future games will be available on platforms besides the Xbox.

Activision's getting "exclusive, worldwide rights to publish and distribute all future Bungie games based on the new intellectual property on multiple platforms and device. Bungie remains an independent company and will continue to own their intellectual property," the release said.

Additional financial details weren't disclosed.

The announcement noted that Bungie's "Halo" games have generated about $1.5 billion in sales, according to NPD, and been played online more than 2 billion hours.

Activision Chief Operating Officer Thomas Tippl said the deal with "one of the world's best developers" strengthens Activision's growth plans. It also solidifies the company's position as the leading publisher of interactive games played online.

Tippl noted that Activision's portfolio includes leading online games such as "World of Warcraft," "Call of Duty" and now the work of the "Halo" creators.

"Now we can bring all that expertise together and it makes a pretty compelling case we can achieve, as Harold likes to phrase it, world domination," he said.

Tippl said Bungie isn't filling a slot created by Activision's fallout with Infinity Ward.

"It's completely unrelated," he said. "We started the discussion with Bungie nine months ago. The timing is purely coincidental. In fact, we had already signed a term sheet with Bungie in March and we just completed our long form today."

Even though it didn't get the publishing contract, Sony will now get Bungie content onto the PlayStation. In case this wasn't clear, the company's computer entertainment group released a gleeful statement of congratulations:

"The partnership between Bungie and Activision is a big win for gamers worldwide. Combining Bungie's creativity with the incredible power of PlayStation 3 will add serious muscle to action gaming. We look forward to extending Bungie's 'next big action game universe' with PS3 users."

Here's the video version of the release:

The biggest tech product coming out of the Seattle area this year, other than Microsoft's Office 2010 suite, may be "Halo: Reach."

Millions of gamers around the world are waiting for Kirkland studio Bungie to release the final installment of the blockbuster franchise that helped establish the Xbox platform.

To prime the pump and smooth any rough spots before "Reach" goes on sale this fall, Bungie and Microsoft are beginning a massive public testing process May 3.

At least 2 million people are expected to try the free online beta version of "Reach's" multiplayer games, using access codes provided with the "Halo 3: ODST" game, which went on sale last September.

The swarm will stress test the game's infrastructure and help designers tweak the setup so the game is as balanced and fun as possible.

Bungie is hoping it will be the largest beta test of any console game, according to Brian Jarrard, the 180-person studio's community director.

"We know that we have passionate fans who we are going to encourage to try to break the game and find these issues now so we don't have to deal with it in the fall,'' he said.

Jarrard and Chris Carney, a former Seattle architect who is now a multiplayer design lead at Bungie, shared details of the beta, the game and more last week. Here's an edited transcript of the interview:

Here's a video from Sony's event in Seattle showcasing the PlayStation 3 Move system and SOCOM 4, followed by today's column - a Q&A with Brian Soderberg, president of SOCOM developer Zipper Interactive.

For its noisy shootout with Microsoft this fall, Sony is turning to one of its big guns in Redmond.

Sony is counting on Zipper Interactive to produce a blockbuster game for the PlayStation 3 this fall, when it's releasing a new version of its hit "SOCOM" military-action franchise.

The game will help showcase a new PS3 motion-control system called Move that's expected to cost about $100.

Move is going head-to-head with Microsoft's Project Natal control system for the Xbox 360 in the crucial holiday season.

Both companies are hoping these exotic new control systems will refresh their maturing consoles as the economic recovery takes hold.

They're also hoping for the kind of success that Nintendo has enjoyed with the Wii, attracting players turned off by complicated control systems, while also inspiring game studios to create new forms of immersive entertainment.

Zipper and "SOCOM" helped Sony leap ahead in the past.

When the PlayStation 2 introduced a network adapter enabling online play in 2002, the first "SOCOM" game was released to showcase this capability. The "SOCOM" franchise went on to be one of the PS2's biggest hits, selling more than 10 million copies, and Sony bought Zipper in 2006.

"SOCOM 4" is still early in development, with no price or release date set yet, but Sony has been showing it to fans and reporters in events across the country, including one in Seattle earlier this month.

During that session, I caught up with Zipper President Brian Soderberg, who co-founded the studio in 1995 after working on military-simulation systems. Here is an edited excerpt of the interview:

Q: What was it like to make a game with Sony's Move motion-control system?

A: Well, it actually was quite easy. I was a little skeptical after playing the Wii because it's very casual game and "SOCOM 4" is more of a core game. Although really, we're shooting for a more accessible game. I think the Move does that for us â€" it's much easier than trying to get both thumbs going.

Q: I'm curious about how physical the game will be, like with physical attacks?

A: We're still researching additional gestures. I know we're going to do some close-quarters moves like rifle butts and maybe bayonet style. Other things you can investigate is grenade throw and things like that.

Q: I wonder how people will feel about intense games like this and motion controls. When you start killing characters with your motions instead of just your thumbs, is it going to be a different psychological experience?

A: I think it will. It's interesting, when you walk by our offices and you see people playing with it, they actually seem a little more immersed, because it is more like a gun.

I think it actually opens the door for more immersion and obviously when you start doing gestures you're getting more physical and more into the game.

Q: How far can you go this direction? Is there some kind of boundary you don't want to cross, having people do these things physically?

A: I don't know about boundaries. It feels like there are really no boundaries that you have now. You have full 3-D motion and such accuracy and precision; you can pretty much do anything. Anything you can do with two hands, you can start to make that the interface to your game.

Q: It's like we're at a crossroads with entertainment, with these new systems taking us into the next realm.

A: I think this really is. It's just what are the developers going to do to take us to that next level.

Q: How will Sony's motion system do compared with other motion systems coming out this year?

A: Sony took their time and they did some really neat things. Their thing was to be super comprehensive with the full 3-D space recognition, plus the full three axis recognition, plus the precision and very low latency. It makes it possible to play all these core games, besides casual games, with such precision. I think the core game players are maybe going to embrace this as well.

Q: Do you think Microsoft's Natal system is sharp enough for aiming and motion in core games, or do you think they might just have minigames that show off Natal capabilities?

A: The minigames, casual games, are the obvious things that would be easy to do with that system. I'm not sure how you start doing guns in it. Maybe they're going to have add-on controllers, additional peripherals, added into it.

Q: Is it hard to keep your team motivated to build the fourth edition of something?

A: I always think that. I always think they're going to get tired of it. But when I actually check around the team a lot of them are really rabid "SOCOM" fans too, so they get really excited about it.

Q: I hear this version's going to be more cinematic.

A: Definitely. Besides the usual emphasis on AI [artificial intelligence] and replayability and being able to do things from different directions, the single-player will have a very cinematic story. As you play through you'll actually learn things about what's going on with your enemies and your teammates. There will be some cool surprises, that sort of thing.

We did some really cool things with the cinematics. Rather than just doing motion capture where you hook up the guys and capture the motion, at the same time we also captured the voice so we did dialogue and motion together. ...

Q: So they basically acted it out?

A: They basically were actors, yeah. We capture everything. We even did some digitization of the camera moves as well, so we had a handheld camera and a professional cameraman to actually do the motion. It really makes a difference; it makes it really feel like a movie.

Q: I understand this material will appear not just in cinematic sequences but during game play as well?

A: Absolutely. As much as we can. First of all, it's going to run in the actual game engine, so it's not like movies [playing at certain points during the game]. As much as we can, we will not take the camera away from the player. You'll be going through the environment and you'll just experience these cinematic events. ...

Q: How is business? We heard dreary reports about the game industry over the past year and now all sorts of interesting new things are coming to market. Are we into a new cycle?

A: It seems like it's turned around to me. Sony's really bullish on the future and we have some really big titles ... just came out. There are some big titles coming out and I think Sony's really doing well so I think the business is turning around.

Q: Do you think people have money to buy these new games and motion systems?

A: I think so. These new games that have been coming out recently have some pretty big numbers with what they sold. I think things really are turning around.

Marking the end of "Halo 2" online play after Xbox Live pulled the plug this week, the Bungie team shared bittersweet, hilarious and sometimes raunchy stories behind the hit Xbox game on a special memorial page today.

In addition to glimpses of life inside the secretive Kirkland game studio, the page has anecdotes from the intense rush to finish the game, art proposals that weren't included and a spectacular batch of game storyboards. Here's a bit from a screen grab:

Most amazing, though, may be the final tally of "Halo 2" online activity over the last five years. A sample:

Unique Players (not including guests): 6,603,900
Kills: 36,784,837,266 (Or something like 5.5 times the current population of the earth)
Assists: 10,422,552,715

Seconds playing campaign on live: 850,462,468,852
Minutes playing campaign on live: 14,174,374,480
Hours playing campaign on live: 236,239,574
Days playing campaign on live: 9,843,315
Years playing campaign on live: 26,950 (Or about 1.7 billion dollars at a minimum wage of 7.25)

The Big Fish Babes I profiled last summer are still together and were highlighted this morning on "The Today Show," which included video taken at Seattle's Big Fish Games, the company whose casual titles brought the group of women together.

Here's the original story about the Babes and the "Today" video:

Visit msnbc.com for breaking news, world news, and news about the economy

Retail sales of video games sank in February, falling 15 percent to $1.26 billion, NPD reported today. Game hardware sales fell 20 percent, software was down 15 percent and accessories were down 1 percent.

But there was a silver lining for Microsoft, whose Xbox 360 was the best selling console of the month for the first time since September 2007, when "Halo 3" was released. The company sold 422,000 consoles last month, compared with 360,100 PlayStation 3s sold by Sony and 397,900 Wiis sold by Nintendo. The handheld Nintendo DS sold 613,200 units.

I wonder if next week's arrival of Sony's "God of War III" will give PS3 the top spot in March.
"Bioshock 2" on the 360 was the top selling game, followed by "New Super Mario Bros. Wii" and "Modern Warfare 2" on the 360. NPD said "Modern Warfare 2" has become the third best-selling game ever, with just under 10 million units sold since its launch in November.

Redmond's Gas Powered Games today launched "Supreme Commander 2," a new version of its hit real-time strategy game for the PC.

Players command and customize massive land, sea and air battles with hundreds of individual units, plus 27 "experimental" battle machines.

Gas Powered's also releasing a version for the Xbox 360 on March 16, the first time the company has developed a console version of the game in-house.

Real-time strategy games are a niche market but they've been a profitable one for Gas Powered, especially as other game companies have shifted their focus to broader markets.

"A lot of people have walked away from this market and we see it being wide open now," said founder Chris Taylor (pictured).

The "Supreme Commander" franchise has sold 1.5 million copies, including around 800,000 when the last version was released in 2007. Taylor's hoping "Supreme Commander 2" will sell at least a million copies.

Gas Powered recently employed around 55 people but Taylor's expecting to let 10 to 12 go after the game's released, as work slows between releases.

"It's nothing like Hollywood but there are some similarities - you build a production team, you make a movie and then you disband," he said.

Fortunately Gas Powered already got another huge project in the works. Taylor revealed last month that the company's using its RTS technology to build a new franchise called "Kings and Castles" with kings vying for control of a medieval fantasy world.

Meanwhile Japanese publisher Square Enix is releasing "Supreme Commander 2," which retails for $49.99 and is rated E10 for players 10 or older.

A few screenshots:

Here's a Gas Powered video of Taylor introducing team members now working on "Kings and Castles":

The closely watched monthly game sales report from NPD is bleak today -- total U.S. retail sales of video games hardware and software were down 8 percent for the year to $19.66 billion.

But analyst Anita Frazier noted it's still been a good decade with more than 250 percent growth in sales at retail since 2000.

Through the year, PC game sales were down 23 percent and overall game software sales were down 11 percent, the firm said this afternoon.

From the release:

Aside from portable hardware, which experienced a 6 percent increase in revenue in 2009, all video game categories experienced declines, with the largest decline coming from console hardware (-13 percent). Console software and portable software both experienced declines of 10 percent, while video game accessories experienced a 1 percent decline.

Sales picked up a bit in December, when a 16 percent year over year increase in console sales contributed to an overall 4 percent sales increase.

One of Frazier's prepared comments:

"December marks just the fourth month of the year where the industry saw an increase over last year. January and February were both up, and since the decline that began in March, only September experienced growth. The big sales this month, particularly on the hardware front, is a positive move for the industry headed into what will hopefully be a recovery year in 2010."

Nintendo sold the most hardware in the month -- 3.81 million Wii consoles and 3.31 million DS handhelds -- while Sony edged out Microsoft, selling 1.36 million PlayStation 3 consoles vs. 1.31 million Xbox 360s.

Nintendo also claimed six of the 10 best-selling games during December. Valve's "Left 4 Dead 2" made the list at No. 9:

For the year, "Call of Duty: Modern Warfare 2" on the 360 was the best-selling game. "Halo 3: ODST" came in ninth, and Nintendo titles dominated the rest of the list:

T-Mobile this morning said Eric Clapton's lending his name to the company's new myTouch 3G Fender Limited Edition - the one with a sunburst wood-grain, guitar like design.

Clapton's appearing in the company's ads and his songs "Layla," "My Father's Eyes," "Rock 'N' Roll Heart" and "Wonderful Tonight" will be preloaded on the HTC device. Also included are songs from Wyclef Jean, Avril Lavigne and Brad Paisley and the "Guitar: Solo" and "Musical Light" applications.

T-Mobile is also contributing Clapton's Crossroads Guitar Festival, which benefits a drug treatment center in Antigua. I wonder if they thought it would be held at the shopping center near T-Mobile USA's Bellevue headquarters?

The phone goes on sale for Jan. 20 for $180 with a two-year service plan.

It's the second Eastside company to lasso a celebrity spokesperson this week.

On Tuesday Nintendo - which has its U.S. headquarters in Redmond - said Beyonce will do more promotion of the DS and its "Style Savvy" fashion game.

Beyonce last year pitched "Rhythm Heaven" for the DS. For "Style Savvy," she's providing downloadable designs from the Dereon clothing line she and her mother, Tina Knowles, created.

A new report says Seattle is one of the country's three most conducive areas to video game development, along with San Francisco and San Jose, Calif.

The report by the Washington Interactive Network comes as the Legislature hashes out its budget, but network director Kristina Hudson said the industry isn't pushing any particular bills this session.

Instead. it's hoping the state will maintain tax incentives for high tech research and development and watching the state's new taxes on digital distribution.

Hudson said the study's goal was to find the top game development regions and figure out if any was dominant. It analyzed Seattle, Atlanta, Austin, Boston, Chicago, Dallas, Los Angeles, Minneapolis, New York, Salt Lake City, San Francisco and San Jose.

It drew on earlier reports quantifying the region's game industry, which employs more than 15,000 at more than 150 companies in the western Washington. Excluding Microsoft, those firms grew employment 14 percent from 2006 to 2008, to 5,070 jobs in the Puget Sound region.

The conclusion was that three cities -- Seattle, San Francisco and San Jose -- are in the "top tier" worldwide, based on the number of firms, educational institutions, cost of living, cost of business and available engineering, multimedia and animation talent.

From the conclusion:

Much of the infrastructure is in place to keep Seattle competitive. Seattle ranks among the top tier regions in the nation in overall competitiveness in the Interactive Media sector, along with the Bay Area and Los Angeles and international leaders such as Vancouver, Tokyo and Seoul. Two factors that continue to push the Seattle region ahead of its competitors are the region's historic strength in wireless talent and technologies, and the significant lower cost of doing business.

Hudson's group plans to post the report online this week.