Fresh off of the report of his company's blow-out performance in November, Nintendo of America President Reggie Fils-Aime held a conference call with reporters and analysts this morning to crow a bit and offer an update on manufacturing and distribution of the best-selling Wii.
"We expected Wii to perform extremely well within the historic launch parameters of the video game industry," he said. "What we didn't expect was to write an entirely new chapter in that history and to do that so fast."
The 6 million units Nintendo has sold in the U.S. since the Wii was launched in November 2006 is "unheard of in our industry," Fils-Aime said.
Nintendo has maxed out its production at 1.8 million a month. That's the limit because of supplier capacity, Fils-Aime said. The North American market received about half of that capacity in November with the remainder going to Europe and Japan.
To make sure the units coming into the United States get to retailers as quickly as possible, Nintendo has tripled its work force at its North Bend distribution facility, Fils-Aime said. (This summer, Nintendo reported about 1,000 employees in Washington state, though the company didn't break out how many were at North Bend.)
Fils-Aime said Nintendo is trying to "alleviate frustration" among shoppers who have not been able to find a Wii. He also discouraged people from paying resellers more than the full price of $250.
For parents who want "something to put under the tree," Nintendo is launching a rain check program with retailer GameStop. On Dec. 20 and 21, shoppers can pay up-front for a Wii and get a certificate guaranteeing them a console some time in January. Fils-Aime said there are "tens of thousands" of these rain checks that will be available across GameStop's roughly 3,000 locations.
He also said Nintendo expects sales to continue at pace after the first of the year.
"We have no date targeted for when our production no might change, either up or down" from 1.8 million units a month, Fils-Aime said.
NPD Group just released its November video game sales figures and it was a whopper of a month. U.S. video game industry sales came in at $2.63 billion in November, up 52 percent from a year earlier.
In the hardware race, Nintendo's products were the clear leaders. The Wii console sold 981,000 units in the U.S. and demand is still unfulfilled.
"The Wii had its best-selling month yet, besting last December by 60 percent," NPD video games analyst Anita Frazier said in comments released with the November stats. "Since there is still an evident inventory shortage at retail, it's difficult to say just how high sales could be if you took that issue out of the equation."
Microsoft's Xbox 360 also had a hot-selling month, its second-best since December 2006, according to Frazier, with 776,000 units sold.
The previous-generation Sony PlayStation 2 outsold the current-gen PlayStation 3 by 30,000 units: 496,000 PS2s were sold, compared with 466,000 PS3s.
In the portable category, which Nintendo's PR people have been urging reporters to take a closer look at, the Nintendo DS sold 1.53 million units. Sony's portable, the PSP, sold about a third as many units.
On the games front, the leader was "Call of Duty 4: Modern Warfare." A total of 2.01 million copies were sold. More than three-quarters of the titles were purchased for the Xbox 360 with the remainder going to PS3 owners. The No. 2 game was "Super Mario Galaxy" for the Wii, with 1.12 million units. "Assassin's Creed" made a strong debut, selling 1.36 million copies -- again, split about three-quarters to one-quarter in favor of the Xbox 360. (NPD ranks software sales by platform, so even though "Creed" moved more total copies, it didn't take the No. 2 spot from "Mario" because it was split across two platforms.)
Frazier noted that "Assassin's Creed" was the "best-selling new IP" -- meaning not a sequel -- in the month it was launched. "Gears of War" last owned that distinction.
There was plenty of coverage during the month of two more peaceful titles thought to appeal to a broader audience: MTV's new "Rock Band" and the established "Guitar Hero III: Legends of Rock" from Activision. The latter title sold 967,000 copies -- on the PS2 -- plus 426,000 on the Wii and about 500,000 more on the other platforms (PS3 and Xbox 360) for a total of 1.9 million.
As for "Rock Band," Frazier said in her e-mailed comments that its 382,000 total sales may be viewed as disappointing, but initial shipments were limited. "This is the kind of title that can easily build momentum in December and beyond as word of mouth spreads," she added.
NPD offered an interesting subtext in this month's report. Microsoft has touted its strong game and accessories attach rate -- the average number of games and add-on hardware products sold per console. But the Wii had a stellar month for accessory sales. "Four of the five best-selling accessories for the month were Wii controllers," Frazier said. "The Wii Zapper, which debuted in November, sold 232,000 units. The second-best selling accessory for the month was the PS3 wireless controller at 282,000 units."
When we got an e-mail informing us of the pending departure of Akira Chiba, president of "Seattle-based" Pokemon USA, we were a bit perplexed. Seattle-based? We didn't even know Pokemon USA existed, let alone had an office here.
Well, the company in charge of the ultra-popular kids entertainment brand in the United States does in fact have a 45-person Bellevue office that handles the trading-figure game, trading-card game and more product-focused stuff, said J.C. Smith, marketing director of Pokemon USA. It's not quite a headquarters, though. The "Seattle-based" descriptor was in error.
So what's Pokemon USA doing here? Being close to Nintendo is part of it -- Pokemon has been a popular title on several Nintendo platforms -- although most of that relationship is managed out of the New York headquarters, Smith said.
Anyway, the outgoing president, Chiba, "joined Pokemon USA in 2002 when the company's New York office was established, the brand's first corporate headquarters outside of Japan," according to the company's release. He's off to "to pursue other opportunities" and will be replaced by Kenji Okubo, previously executive vice president and head of Pokemon USA's Seattle office, effective Jan. 1.
Microsoft sent out a news release about the Xbox 360 titles that cleaned up in Spike TV Video Game Awards last night. Clearly, a strong showing. But I'm somewhat skeptical -- maybe cynical -- about one particular category that "Halo 3" won.
First, let's recall the marketing hype and consumer-product tie-ins that proliferated around the launch of "Halo 3" in September. Mountain Dew and Microsoft served up a "Halo 3"-branded drink called Mountain Dew Game Fuel, which boasts an "invigorating blast of citrus cherry flavor and added caffeine for maximum intensity." It was billed as the first beverage co-branded with a video game.
Now comes the Video Game Category of "Most Addictive Game fueled by Mountain Dew," which Microsoft pointed out in its press release as "the only category with consumer online voting." The nominees are: "The Orange Box," from Valve; "Guitar Hero III: Legends of Rock," from Activision; "Wii Sports," from Nintendo; and "Halo 3," from Microsoft Game Studios.
Is it any surprise that the first video game branded paired up with a beverage would win in the category sponsored by that beverage? Or maybe this was legitimately the fan favorite for most-addictive game -- also plausible. Thoughts?
I'm thinking Alex St. John over at Wild Tangent would agree wholeheartedly with John Riccitiello, CEO of Electronic Arts, the biggest video game publisher, who said today:
"You can't be as bullish as analysts are on in-game advertising and be sane," he said. "In-game ad expectations are wildly high."
One widely reported forecast by the Yankee Group has in-game ad revenue reaching $971 million by 2011 up from just $77.7 million last year.
Microsoft, for one, has been particularly bullish on in-game advertising, acquiring the Massive Network for as much as $400 million, according to unconfirmed reports, last year. Here's an in-depth look at Massive's business from earlier this year.
That deal and others helped build hype around the nascent in-game ad business, Riccitiello told Dow Jones. EA, which controls several top titles in the sports category that advertising leaders say are a natural fit for in-game promotions, is cranking out about $30 million a year from in-game ads -- a small slice of total revenue.
I spoke with St. John earlier this month. He says in-game advertising is much less efficient than other options his company offers in the category of around-game advertising. Particularly for casual games, more flexible models are working better at Wild Tangent. Some examples include giving advertisers the opportunity to sponsor game play sessions; and giving players the choice of viewing a short pre-roll ad while a game is loading, or paying for the game session.
Activision today boosted its outlook for the December quarter and fiscal year on the strength of two hot games, "Call of Duty 4" and "Guitar Hero III: Legends of Rock."
CEO Bobby Kotick, perhaps feeling flush with that success, started dishing out advice to some other big players in the video game business.
At the Reuters Media Summit, Kotick suggested that Microsoft's Xbox 360 and Sony's PlayStation 3 will have to come down in price to $199 to gain the mass-market appeal Nintendo has achieved with the Wii.
"The Wii at its [$250] price point is now setting a standard and an expectation, and people say, 'Well, the Wii is less complex technically.' I don't think that really matters as much to the consumer. ... In the next 24 months they all will need to be at that $199 price point, and you can imagine Nintendo will be down to the $129 price point over the next few years," Kotick said, according to this Reuters story.
The PS3 is down to $400 for the 40 gigabyte version. The Xbox 360's least-cost alternative is $280.
Meanwhile, Nintendo executives are again banging the scarcity gong and reporting the best week of Wii sales since the console hit the market. Here's Reggie Fils-Aime from an AP story: "I couldn't find a single Wii system on the shelves -- literally as I was walking into a Wal-Mart at 11 a.m., someone was walking out with the last one."
A few interesting articles and tidbits from the gaming world today:
The New York Times has an interesting take and detailed history of the battle of the bands raging between "Guitar Hero III: Legends of Rock" from Activision and MTV's "Rock Band," two hot-selling, multi-platform titles.
Microsoft today announced another social-networking feature that will be added to the Xbox Live Dashboard with a Dec. 4 update. Gamers will be able to expose their friends lists to everyone or just their own friends. You know the old song, make new friends, but keep the old. That's the idea here. The company's press release on this feature noted there are now 8 million people on Xbox Live.
No big surprise here, but November online video game sales in the weeks before "Black Friday" were up 134 percent from a year ago, according to comScore. That's the fastest growing e-commerce category and outpaced the overall growth rate for retail e-commerce (excluding travel sales) of 17 percent in the period.
Update: Sony just crowed about its Black Friday sales. Here's the digits: PlayStation 3 sales up 245 percent from Black Friday 2006 (when the new console had been on the market only a matter of days and was significantly more expensive than competitors' consoles). Since dropping its prices and introducing a 40 gigabyte model Nov. 2, PS3 sales are up 298 percent.
As promised, Microsoft's top video game title, "Halo 3," on sale for less than a week in September, fueled the company's broader video game business, according to just-released numbers from researcher NPD Group. (Update: Turns out NPD counts September differently than I do. Their September is longer, so the figures in this story actually represent 12 days of sales.)
NPD analyst Anita Frazier called the 3.3 million copies of the game sold in the U.S. last month "phenomenal." That figure was nearly double the total units sold under the next nine best-selling titles in September. (It also includes copies that eager fans pre-ordered online in the months of hype leading up to the game's release.)
"True to its name, the game rubbed off on hardware sales too -- the Xbox 360 realized it's best month ever in unit hardware sales outside last holiday season," Frazier said in a statement. "If ever there was a doubt that great content drives hardware acquisition, this should put that doubt to rest."
For the first time in several months, Microsoft's Xbox 360 outsold the Nintendo Wii, which also had a stellar September.
Here are U.S. console sales for September, from NPD:
Not surprisingly, Sony is lowering the price of its PlayStation 3 console ahead of the holiday shopping season. The price of the top-end 80 gigabyte model was cut by $100 to $499. It also announced a new 40-gigabyte model for $399 -- cheaper than Microsoft's highest-end Xbox 360.
In August, Microsoft announced a price cut of its own: The low-end Xbox 360 "core" costs $280; the midrange version is $350; and, the high-end "elite" system is $450.
Sony's move comes on the same day the NPD Group is expected to release its latest market-share figures for September. This will be the first month to show the impact on Xbox 360 sales of the blockbuster game "Halo 3," which generated $170 million in U.S. sales in the 24 hours after it was released Sept. 25. Microsoft executives had expected perhaps a third of "Halo 3" purchasers to buy an Xbox 360 at the same time. Check back this afternoon for details.
Meanwhile, here's what the U.S. market looked like in August, according to NPD (the first number is August sales, the second is life-to-date sales):
People on Microsoft's Xbox Live gaming service can download a free game that's actually an advertisement for a car. The game, Yaris, debuted today, according to this New York Times story. It's the first free advergame to be distributed over Xbox Live Arcade, the story says.
The Times' coverage goes over the other advergames that Microsoft's Xbox team has been involved in, most notably the ones promoting Burger King, which were sold with burgers and fries, only at Burger King restaurants. Microsoft Entertainment and Devices Division President Robbie Bach told an audience earlier this year that he wasn't expecting the success of the Burger King promotion.
"If you had asked me a year ago, 'Gosh, you're going to do a promotion with the Burger King on Xbox Live Arcade and it's going to generate headlines in the business press about how we lifted Burger King's sales,' I would have been truly surprised," Bach said at Microsoft's Mix conference in May. "... It had a demonstrable impact on their financial results."
More companies are jumping on the video game advertising bandwagon, as the Yaris example illustrates. There are several different flavors of video game advertising, and Microsoft is wading deeper into all of them. Check out this story on the workings of Massive, the in-game advertising network Microsoft acquired.
A man in China dropped dead after playing online games for three days straight, according to reports from Chinese media today and this story.
The 30-something man from Guangzhou died Saturday after being rushed to the hospital from the Internet cafe, the Beijing News said. Exhaustion was given as the most probable cause.
CANCAN CHU/GETTY IMAGES
Most of the customers at this Internet cafe in China are students.
It's hard to know how much of this is real and how much is state propaganda designed to discourage Web addicts. Chinese authorities have been cracking down on Internet content and Web-surfing activities, including banning new cybercafes and limiting the time users can spend playing games online.
As for this poor guy from Guangzhou ... maybe his avatar can live on in Second Life.
Nate Robinson, one of our intrepid interns, went to last night's sneak preview of "Halo 3," and brought back this report. And be sure to check out his video footage below -- including a fan who says that when the game comes out "it's going to be the biggest skip day of the year."
Seattle videogame fans were privy to a special treat Tuesday night, courtesy of hometown superstars Bungie Studios. The team behind the upcoming blockbuster "Halo 3" reserved the Seattle Center's Imax theater for a one-of-a-kind preview to show off their game's new features to, perhaps, the crowd that would appreciate it the most.
More than 500 people turned out for the event, far more than Bungie had expected, said Bungie staff writer and community figurehead Frank O'Connor. The Kirkland-based team had decided just the day before to hold the preview, but such short notice wasn't a problem for the Halo faithful -- some of whom waited in line for 12 hours and came from as far away as Oregon.
Those who made it into the theater were rewarded with the first public gameplay demonstration of "Halo 3's" single-player campaign, as well as a quick glimpse at the new multiplayer-specific gameplay options. Bungie showed off a few new vehicles (the Chopper, a motorcycle from Hell, and the Elephant, an enormous drivable base) and weapon types (some long-awaited, some wholly original). The majority of the campaign demo was spent tooling around in the game's third mission, Tsavo Highway, but the fans, who cheered heartily at every opportunity, clearly didn't mind.
The new multiplayer options, however, appear to add more than just new toys and refinements to a solid formula. New to "Halo 3" is a game type dubbed "The Forge" -- a mode in which the players are free to manipulate the environment as they see fit on-the-fly, promising a seemingly endless variety of gamplay options normally reserved only for mod-friendly PC games. This, combined with the previously announced ability to save, play back and edit video replays of matches, means the game's famously popular multiplayer just got that much better and hard to put down.
"Halo 3" comes out Sept. 25 for Microsoft's Xbox 360.
Adweek has a broad look at the market for in-game advertising and the fact that it has not lived up to the hype of just a year ago from in-game advertising purveyors, including executives at Massive.
This story provides great ad-industry context to help understand our recent profile of Massive, which Microsoft acquired, and its business model. I also focused more on how Massive fits into Microsoft's advertising strategy.
The Adweek story outlines several gripes advertisers and analysts have with dynamic in-game advertising as it exists today, including:
Lacking impact and interactivity;
Effectiveness, execution and measurement tools remain "iffy";
Distribution mainly to the PC (read: hard-core gamers), but not as much happening on the consoles (read: the TV in the living room).
Pearl Jam was rocking out at Lollapalooza on Sunday, per usual, this time riffing on Pink Floyd's "Another Brick in the Wall" during a performance of "Daughter." Lyrics criticizing the president were cut from AT&T's Web cast of the event.
According to the Seattle band's Web site, the lyrics "George Bush, leave this world alone" and "George Bush find yourself another home" were censored.
The concert organizers did a bit of reporting to find out what the hell happened: "When asked about the missing performance, AT&T informed Lollapalooza that portions of the show were in fact missing from the Web cast, and that their content monitor had made a mistake in cutting them."
PJ was not happy:
This, of course, troubles us as artists but also as citizens concerned with the issue of censorship and the increasingly consolidated control of the media.
AT&T's actions strike at the heart of the public's concerns over the power that corporations have when it comes to determining what the public sees and hears through communications media. ...
If a company that is controlling a Web cast is cutting out bits of our performance -- not based on laws, but on their own preferences and interpretations -- fans have little choice but to watch the censored version.
What happened to us this weekend was a wake up call, and it's about something much bigger than the censorship of a rock band.
The band plans to post an uncensored version of its performance on its Web site soon.
Clear the streets. The "Halo 3" parade is beginning.
Microsoft today announced that the third installment of its hit video-game series, due out Sept. 25, has already sold more than 1 million preorder copies.
Brier Dudley explored just how important the success of "Halo 3" is to Microsoft in his column Monday.
Now comes the marketing effort that underscores that importance. In addition to the preorder "news," Microsoft lifted the lid on its marketing plans for the game, and the "Halo 3" branded Xbox 360 is just the beginning. Think major motion picture, Microsoft says.
The company is doing promotional deals with consumer brands that it says set a precedent in video-game marketing.
Mountain Dew is rolling out the first beverage co-branded with a video game, Mountain Dew Game Fuel, which boasts an "invigorating blast of citrus cherry flavor and added caffeine for maximum intensity." (Warning: Do not pour beverage into Xbox 360, it will not improve performance.)
Should you choose to leave your Xbox 360 for long enough to hit up 7-Eleven, treat your "Halo 3" withdrawal tremors with "Halo 3" Slurpee cups and other in-store promotions.
If you need a new car, Pontiac would like you to come down to select showrooms where you can play the game before it's released. And 1,000 people who buy a G6 GXP Street will get a copy of the game. (This seems like a promotion that might be a better fit with "Grand Theft Auto." Then again, maybe not.)
Burger King, which has successfully partnered with the Xbox 360 in the past, will plaster the "Halo 3" marketing materials on its giant cups of pop and French fry containers. (They're called FRYPODS. Does Steve Jobs know about this?)
Comcast is also getting into the act with user-generated content and video downloads related to the game.
Microsoft today announced that John Schappert has been named to head the company's Xbox Live efforts in a newly created role within the Interactive Entertainment Business.
Schappert comes to Microsoft after nearly 10 years with Electronic Arts, the No. 1 video game publisher. If that sounds like a familiar career path, it is. On July 17, Microsoft announced that Peter Moore, head of the Interactive Entertainment Business, is leaving to become president of EA Sports. In his place, Microsoft hired Don Mattrick, who's last job before coming to Microsoft as a consultant in February was with ... wait for it ... EA.
Schappert was an executive vice president at EA in charge of central technology, operations, EA online and the office of the chief creative officer, according to Microsoft's announcement today.
Schappert's purview at Microsoft is the Xbox Live online gaming network, which has more than 7 million members. In addition to multi-player games, the network offers video downloads and communication services, such as instant messaging. He will also oversee Microsoft's casual games business.
So, should the growing roster of EA alums at Microsoft and vice-versa raise the hackles of competitors?
As Microsoft's Xbox 360 price cut takes effect today, analysts are taking a broad look at the marketplace and focusing on additional features beyond playing games.
Billy Pidgeon, a veteran analyst with IDC, notes that the Xbox 360, PlayStation 3 and Wii all have the ability to connect to the Internet and store downloaded content, giving rise to three new business models beyond hardware and software sales: "premium subscription fees, paid downloadable content (DLC), and a fledgling advertising market."
He said in a press release that the "use of connected consoles is expanding the business opportunities and cash flow this console cycle" and has "huge potential."
The IDC report predicts:
"Revenue derived strictly from connected consoles will grow from $981 million in 2007 to $10.5 billion in 2011. In 2007, online console revenue will be 2.5% of total global video game market revenue, including console and hand held hardware and software revenue. By 2011, revenue from connected consoles will represent 18.6% of total market revenue."
Meanwhile, a study from the NPD Group indicates gamers are not always aware of the additional features in their next-generation consoles:
"While playing games is the primary function of all video game systems measured in the study, it should not come as a surprise that, despite marketing efforts to educate the consumer, awareness of functions that extend beyond gaming are comparably lower.
"... PS3 owners are downloading additional content as frequently as Xbox 360 owners, but unlike 360 owners, the majority of owners and likely purchasers are simply unaware that this is even possible on a PS3. Were awareness higher, one could logically deduce that download activity would increase as well."
NPD analyst Anita Frazier said additional features will become more important in the future, but "currently the importance of these features and the awareness among consumers of these features is far from universal. To make headway in this 'next-gen' race, manufacturers still need to be primarily concerned with the quality and entertainment value of the games themselves."
Really there was no surprise. Everyone saw this coming. Not because of Sony's price cut -- which turns out to be not much of a price cut at all, once the $500 60-gigabyte PlayStation 3s sell out and all that's left is the $600 80-gigabyte version. In fact, another analyst, Van Baker with Gartner, said he didn't see any serious pressure from the marketplace for the Xbox price cut. (He also doesn't see Microsoft competing with Nintendo for the same set of customers, something other analysts and executives might disagree with.)
No, the reason everyone saw it coming was because, well, we saw it.
"There are people at certain big box retailers that like to leak fliers," said Pidgeon, referring to the scanned copies of print advertisements from Circuit City and Toys R Us, which appeared at game-enthusiast sites such as Joystiq last month, showing the exact price cuts Microsoft just announced.
I asked Xbox 360 group product manager Aaron Greenberg why, when there was this obvious evidence the cuts were coming, executives decided to stay mum and make the announcement on their own terms. Here's what he said:
It's interesting, we've had some internal debate here about like how many people really read some of those blogs. I mean while there's been some fuzzy, camera-phone photos like, we haven't seen any mainstream media covering it. I think it's still been pretty much in the speculative space and you know, for us, we know there's always a risk that when you're timing with prices like this and you want to have real, serious integration with retail -- every major retailer is doing a big Sunday ad -- these things are always at risk and we wouldn't trade the risk of those leaks for not having the retail tie-back, so we felt like we made the right bet there. But still we also don't want to just take the leaked news and feel like we have to confirm stuff when certain details are there; some of it's right and some it's wrong. We want to be able to, as we planned, announce it when we're ready to.
Another little detail that came out of Monday's announcement: the limited edition "Halo 3" version of the Xbox 360, priced at $400, and decked out in green and gold, and, Greenberg said, it will have the same HDMI (high-definition multimedia Interface) connection as the "elite" version, which goes on sale tomorrow for $450. The upside of an HDMI connection is that it is a single cable that carries both HD video and audio signals.
This could put a damper on the holiday video game season: "Grand Theft Auto IV," one of the most-anticipated games of the year, will not be released until sometime in early 2008, according to publisher Take Two Interactive Software.
The game's release is being moved from the company's fiscal fourth quarter, which ends Oct. 31, to the second quarter of its 2008 fiscal year, which ends April 30, 2008, "due to additional development time required to complete the title," according to a statement on the Take Two's investor relations Web site.
The game was to be released for Sony's PlayStation 3 and Microsoft's Xbox 360 simultaneously.
That apparently complicated development.
"Certain elements of development proved to be more time-intensive than expected, especially given the commitment for a simultaneous release on two very different platforms," Take-Two Chairman Strauss Zelnick said in a statement.
"GTA IV," the next installment of the controversial and wildly popular game that features car jacking and hooker-shooting, was going to be one of a triumvirate of titles to drive Microsoft's Xbox 360 during the all-important holiday season, the other two being "Madden NFL '08" and Microsoft's exclusive "Halo 3" title.
Update: It appears the schedule for the Xbox 360-exclusive "GTA IV" episodic content remains unchanged by this. According to the statement, the episodic content, which will be available via download from Xbox Live, is still in the 2008 line up, where it always has been.
Could this delay help Microsoft when "GTA IV" is ultimately released? The first installment of the episodic content was due in March 2008, according to comments from Take-Two CFO Lainie Goldstein during the company's June 11, 2007 conference call. Goldstein also acknowledged that Take-Two will be paid in two $25 million chunks for the two exclusive installments of episodic content -- for a total, eye-popping price tag of $50 million (a figure that has not been confirmed by Microsoft).
If the first episode of Xbox 360-exclusive content is released in March 2008 -- it's hard to imagine it coming before the game itself -- that would put it within weeks of the release of the game itself.
I got a chance to speak with Rob Correa, senior vice president of programming for CBS Sports, this afternoon about the broadcast debut of competitive video-gaming last weekend. CBS Sports filled an hour of its Sunday broadcast with the World Series of Video Games' Louisville, Ky,, tour stop.
Correa didn't give out any audience data, but noted that summer afternoons are not exactly prime time.
"Sunday at 12 noon in late July is not the easiest time period to get people to watch, but all in all we're satisfied," he said.
He acknowledged that the video game broadcast was a departure from the network's usual sports programming -- highlighted by March Madness and the Masters -- but he still expected some audience overlap.
"Every audience overlaps some ... particularly in sports," Correa said. "We don't have [demographics] yet, but clearly we figured it would be potentially a younger audience than a lot of our core sports programming."
Correa said it's too early to tell whether video games will become a regular part of CBS Sports line up. Two more WSVG broadcasts are planned this fall; a third episode scheduled for August was postponed, he said.
Did anyone tune in to CBS on Sunday to watch the World Series of Video Games' Louisville, Ky., tour stop? Yeah, that's right. Video games were broadcast on network TV on a Sunday afternoon in the middle of summer.
There were plenty of articles previewing this apparent first, but I've yet to see anyone report on the broadcast, prompting the question: Did any one watch it?
CBS' schedule lists another WSVG broadcast coming up Aug. 19, and the WSVG itself had a blog item back in May crowing about the four-episode deal it linked with the network.
I've put a call in to the folks at CBS Sports to ask whether they were satisfied with the initial broadcast and whether this might join the Masters and March Madness as regular events on the broadcaster's calendar.
Robbie Bach is breaking down the Microsoft Entertainment and Devices Division to kick off the afternoon session here. He reassured investors who have watched the division lose billions of dollars over the last several years.
"We said last year we are going to drive this business to profitability in fiscal 08," Bach said. "We are right on track to do that. ... And we believe we can have sustained profitability going forward."
He gave no indication of how much profit the division might deliver.
Like CEO Steve Ballmer did this morning, Bach lamented the $1 billion charge the company took in the fourth quarter related to the quality problems with the Xbox 360. He reiterated that it was something the company had to do to stand behind its product.
"Certainly a key focus for us right now is quality," Bach said. He said there's no specific component to blame for the rate of Xbox 360 hardware failures, but rather it was a Microsoft design problem with multiple components involved.
Despite the charge, he sees the business reducing its manufacturing costs.
"We are right on track with where we expected to be with cost reduction. That is a key driver in this business," Bach said, offering no detail about when that cost saving would translate to a price reduction.
"We have a very specific plan with what we're going to do with pricing. We're just not going to talk about it today," he said. (The company today announced a lower price for its HD DVD player, sold as an accessory to the Xbox 360.)
Bach quickly reviewed other areas:
Music: He said the Zune music player has sold more than 1 million units since launch and has about 10 to 12 percent of the hard-drive based player market.
"You are going to see us continue to invest in this business," Bach said, adding that it will likely be a three- to four-year effort.
This year, the company, as it has said, will release new Zune software, devices and features. He also plans to invest in expanding the Zune brand out of the "hardcore niche music space" where it is now.
Video: Bach said the company will expand its Xbox Live video download service -- currently the largest provider of on-demand video content -- to Europe and Canada in the coming year.
Communications: Bach said Microsoft aims to grow Windows Mobile's lead over Research In Motion during the 2008 fiscal year. He said the company expects more than 20 million Windows Mobile phones to be sold this year. Noting the high turnover in mobile phones, Bach said Microsoft wants to make more end-users aware that they are using a phone running Windows Mobile.
"We want them to go in and ask for another Windows Mobile phone," he said.
Speculation about when or if Microsoft would drop prices on its Xbox 360 game console was rampant earlier this month, after Sony lowered its prices on the competing PlayStation 3.
Starting Aug. 1, Microsoft will drop the price of an Xbox 360 accessory: The HD DVD player will now cost $179, down $20, and come packaged with five free HD DVD movies during the month of August.
The announcement was made at the Comic-Con International convention in San Diego.
I'm in Redmond for Microsoft's Financial Analyst Meeting, which will feature presentations from Chairman Bill Gates, CEO Steve Ballmer, CFO Chris Liddell, COO Kevin Turner, division presidents Jeff Raikes, Robbie Bach and Kevin Johnson and other top executives.
Check back here throughout the day for updates from the event.
Microsoft and EA Sports announced today that five of the video-game publisher's biggest titles will be incorporated into the Microsoft's in-game advertising network.
The titles are: "Madden NFL 08," "NASCAR 08," "NHL 08," "Tiger Woods PGA Tour 08," and "Skate."
Advertisements will be placed in the games via the Massive Network, which Microsoft acquired last year.
It's doubtful that Peter Moore, the Microsoft video games executive who is leaving to head EA Sports, had much to do with negotiating the deal, terms of which were kept private. I'm asking about that and will post a response here.
(Because in-game advertising is handled by Massive, which sits within Microsoft's Online Services Division, Moore, who is part of the Entertainment and Devices Division, had nothing to do with the deal, according to an e-mailed statement from a Microsoft PR firm.)
During the E3 Media and Business Summit earlier this month in Santa Monica, I had a chance to talk about in-game advertising with Jeff Bell, corporative vice president of global marketing in Microsoft's video games business.
Bell brings an interesting perspective to the discussion because before coming to Microsoft, he was with DaimlerChrysler, where he worked on the Jeep brand. He tried several game-related advertising strategies including in-game ads (his team helped get Jeep as the vehicle featured in Microsoft's "Zoo Tycoon" game) and adver-gaming. He was also named Interactive Marketer of the Year by Advertising Age in 2005.
From our conversation, this EA deal sounds like just what Microsoft is looking for.
I asked him what role the company sees for in-game ads, and how much advertising is appropriate.
Bell: "I think there we do know and the data is overwhelming, that if you're in a reality based game, people don't want to see Acme. They don't want to see Blogo Shoes. They want to see 7-Eleven and they want to see Adidas. And so, from that standpoint, both from a product realism, as well as an advertising realism, they would like to have the real thing.
"I think where you cross over is you're not going to be seeing Massive or advertisements in 'Mass Effect.' So science fiction doesn't make as much sense.
"For us, I think we tend to focus more on the sports franchises, the reality based driving franchises, Tony Hawk, obviously has been a pioneer in that particular realm of being able to present things in the real world, real advertisements that can attract that audience."
He said EA is leading the way with advertising in sports games, but because of the slow and complex process of negotiating advertising agreements with sports leagues, franchises and stadiums, the area is just now building momentum.
I also asked Bell if he thinks game buyers should get a price break on games that carry a lot of advertising, the reason being that now publishers have a new revenue stream to tap.
Bell: "It's an interesting question, but it's so theoretical at this point, meaning that the business is still driven by the revenue from the sales of the games themselves that, there, I think we're all interested in the growth of the advertising model, but it is at present only a very small part of our overall revenue."
NPD has released its June U.S. video game sales report and the Nintendo Wii continues to outpace Microsoft's Xbox 360 and Sony's PlayStation 3 in U.S. unit sales:
Wii: 381,800 units Xbox 360: 198,400 units PS3: 98,500 units
Sony's PR firm sent out a note last night citing preliminary data that shows the impact of its recent console price cut:
"PS3 sales have increased by more than 135 percent at the company's top five retailers since the new $499 price was announced two weeks ago on July 9. During this same two-week period, total PlayStation hardware sales have increased by 161 percent, software by 15 percent and peripherals by 60 percent."
In addition to strong console sales, games for Nintendo's systems are topping the chart. The company had six of the 10 best-selling software SKUs in June (four for the Wii and two for the hand-held Nintendo DS). Microsoft had three titles in the top 10 and Sony had one, but it was a title for the PlayStation 2.
Microsoft confirmed this afternoon that Peter Moore, the head of the company's video games business, is resigning for personal reasons. Those reasons? He and his family want to get back to the San Francisco area and he got a job as president of EA Sports, the sports label of leading game publisher, Electronic Arts.
Replacing Moore is Don Mattrick, a game industry veteran who spent 23 years with EA.
People attending the Casual Connect gaming conference in Seattle this morning might have caught a scent of this news coming. In opening remarks at the show, Mark Cottam, CEO of MumboJumbo, noted that Marc Whitten, general manager of casual games at Microsoft, would be subbing for Moore, who was billed as a keynote speaker.
"Unfortunately, Peter Moore had a last-minute scheduling change," Cottam said.
SANTA MONICA, Calif. -- For years now, developers have been trying to incorporate more cinematic elements into their video games. Some of the games on display this week at the E3 Media & Business Summit are starting to reach the goal of looking and acting like immersive movies.
Today I talked with a couple of developers to find out how and why they're doing it.
I should note up front that the guys I talked to are squarely within the Sony fold and they spent a lot of time explaining how none of what they are doing would be possible without the expanded storage capacity of the PlayStation 3's high-definition Blu-ray discs and the processing power of its Cell Broadband Engine.
Tam Antoniades, co-founder of studio Ninja Theory, drew the most direct parallels between film production and the forthcoming "Heavenly Sword," an action-adventure game that was hands-down the best looking title at E3, to my eyes anyway. It's exclusive to the PlayStation 3 and one of the titles Sony hopes will attract hard-core gamers to the platform.
"'Heavenly Sword' was shot over six weeks and it was shot just like a movie," Antoniades said, noting that the budget was comparable to that of a mid-sized motion picture: somewhere in the neighborhood of $20 million.
Sony
Performances by actors, including one playing Bohan, were recorded through digital motion-capture technology to give the game "Heavenly Sword" a cinematic feel.
As many as five professional actors were on the set, each covered with hundreds of diodes that allow the digital capture of their movements and facial expressions. In addition to facial expressions, the actors voices and full-body movements were captured as well. While games such as "Tiger Woods Golf" have captured facial expressions using this technique, "Heavenly Sword" marks the first time that actors' facial expressions, movements and voices have been captured simultaneously for a video game, Antoniades said.
The actors rehearsed their parts and "actually played the entire game as a [theatrical] play," before filming began, Antoniades said. The scenes were shot with multiple actors on stage together, allowing them to "play off each other as they would in a movie or a play," Antoniades said, adding that this too was a first for the industry.
The performances are then rendered for the cinematic sequences that carry along the game's story -- evil army invades, red-head heroine gets magical sword, starts kicking butt -- in between fight scenes that are animated in a more typical way, but still look awesome. The appearance is not photo-real, but that's by design. "We did go for a stylized look," Antoniades said. The skin tones, textures and details of the characters were impressive.
Sony
Another richly rendered character in "Heavenly Sword" is Nariko.
The cumulative effect of all this detail and content is to provoke empathy for the characters in the game, creating a more immersive experience. "Just like when you watch a big movie, you feel for the characters," Antoniades said. "... I think that from this point on, a lot of games are going to have to go down this route if they want to have great stories."
It's still not quite on par with the special effects we see in movies -- think Gollum in "The Lord of the Rings" trilogy. Antoniades said the movie industry uses equipment costing millions of dollars to create a frame of action with a computer-generated character in it. (Gollum, not coincidentally, was played by Andy Serkis, who has a starring role in "Heavenly Sword" as the invading King Bohan.) Video games, on the other hand, have to generate their images with technology that costs far less.
"The fact that you can approach almost cinema-level [quality] on a home console is amazing even to us," Antoniades said.
The technology inside the PlayStation 3 is by far the most powerful of the current generation of game consoles -- and also the most expensive. But it's the high-capacity Blu-ray, along with the powerful processor cores, that allow developers like Antoniades to cram in the rich detail that makes their games so beautiful and realistic. "Heavenly Sword" is a 29 gigabyte game. A typical DVD can hold about 9 gigabytes.
PopCap Games has acquired Chicago-based game developer Retro64 for an undisclosed sum, the Seattle casual game maker said this morning. The deal will allow PopCap to bring new action and puzzle games into its library of computer game titles. In addition, Retro64's Chicago office has become a PopCap development studio, managed by chief producer Mike Boeh, who was director of technology for Rollingstone.com before founding Retro64. Retro64's arcade style games include Venice, Water Bugs and Platypus.The company takes its name after the Commodore 64 computer, popular in the 1980s, and the fast, simple games created to play on it.
CULVER CITY, Calif. -- Sony Computer Entertainment made some additional hardware announcements here. This one is focused on the company's PlayStation Portable, or PSP.
An enhanced PSP will be 33 percent lighter, 19 percent slimmer and with a longer battery life, among other new features. It can also be hooked up to a television to display PSP content on a larger screen.
In September, the enhanced model will be available in black, silver and a "Star Wars" design. Each one is packaged with additional content such as games and videos and will sell for $200.
CULVER CITY, Calif. -- Jack Tretton, Sony Computer Entertainment's president and CEO, started his presentation as a digital avatar inside the PlayStation Home environment. The 3-D customizable online space, similar to Second Life, is a big push for Sony and Tretton said it has been greatly improved since it was announced in March.
"Everyone here is extremely proud of PlayStation Home," he said. "This is the kind of innovation that Sony is known for."
He said the presentation will feature "games, games and more games" -- 50 games across the company's major platforms: PlayStation 3, PlayStation 2, the portable PSP and the PlayStation Network. That's in stark contrast to Nintendo's event earlier this morning, which focused on new controllers and expanding the video-gaming audience (see posts below).
Tretton reviewed the company's recent PlayStation 3 price cut. He then moved on to the platform that made Sony the undisputed leader in the last generation of video game consoles: PS2. It has an 118 million-unit install base, seven years into its life cycle, and Sony plans to ship 10 million units this year.
CULVER CITY, Calif. -- The traveling media circus of E3 made its way a few miles inland from Santa Monica for the Sony press conference, starting presently.
The event is in a giant sound stage -- Stage 16, to be precise -- at the company's movie studios here. Despite the size of the space, I'm cramped in the back.
Outside, Sony was serving Bloody Marys. Let's see what they're serving for the PlayStation 3.
SANTA MONICA, Calif. -- Reggie Fils-Aime described how Nintendo is aiming to improve mental health with a range of puzzle games and educational software for the Nintendo DS handheld device.
The "Brain Age" franchise has already sold 15 million titles and new titles from Ubisoft promise to help improve spelling and even be a virtual "life coach."
But the big news, saved for the end of the press conference is "Wii Fit." Fils-Aime said this "effectively takes our big lead in audience expansion and laps it."
Three fitness trainers are on stage now, each standing on a weight-sensing pad. The game depicts a movement, such as a one-legged stretch. The player, or exerciser, follows along and the pad gives you feedback on how you're doing.
A video about the game depicted yoga, push-ups, step aerobics and other exercise movements and balance movements. There are more than 40 activities in the game. The game prompts you with tips.
Nintendo
The Wii Fit -- a new controller from Nintendo -- allows players to perform different exercises or actions.
Shigeru Miyamoto, senior managing director, general manager, of Nintendo's Entertainment Analysis and Development Division -- a rock star in the company -- took the stage to introduce this game. He said through an interpreter that he's more excited about this than some of the higher-profile games announced today.
Miyamoto said the device that they were using is the Wii Balance Board. It's very thin. It can measure your weight and balance shifts while standing on the board. It can be used as a new interface for games that allows you to use your full-body movement for input. It's wireless and can be used anywhere in the room.
Another feature measures your body mass and graph changes in your Body Mass Index over time
SANTA MONICA, Calif. -- Reggie Fils-Aime just announced the Wii Wheel, a wireless steering wheel for use with "Mariokart Wii," a forthcoming release of the classic Nintendo franchise for the company's current-generation console.
"Like the Wii Zapper, this custom steering wheel has the potential to level the track for beginners while offering a new feel, even if you first started racing with Mariokart 15 years ago," Fils-Aime said. (Was it really that long? Yikes!)
"Mariokart Wii" will be available during the first quarter of 2008 and will feature real-time online multiplayer races and battle mode. Fils-Aime suggested that the number of players who can participate at once might be higher than in past versions.
SANTA MONICA, Calif. -- Reggie Fils-Aime just announced "the first offspring of the Wii Remote and Nunchuck."
He showed pictures of a plastic housing that holds both pieces of the motion-sensing control of the Wii in a gun shape.
"The Wii Zapper: On one hand it's a new housing for both the Wii Remote and the Nunchuk, but the real news is what it represents for game play," he said. The Zapper will "change the dynamics of the first-person shooter" category of video games.
Nintendo
The Wii Zapper houses the Wii Remote and Nunchuk.
Capcom is developing a special "Resident Evil, The Umbrella Chronicles," that uses the Zapper. Other third-party developers are working on games for it, too.
It will go on sale for $19.99, and be packaged with Nintendo software as well.
SANTA MONICA, Calif. -- Nintendo opened with a montage of news clips and advertisements for the Wii and Nintendo DS. Then Reggie Fils-Aime, president and chief operating officer of Nintendo of America, took the stage.
"My name is Reggie and I am ... happy," he said, riffing on the introduction he gave at this show in 2004. "To us, today is more than a press conference or a business meeting, we see today as a celebration."
He said the celebration extends beyond Nintendo.
"We think this E3 marks a conclusive turning point for the video game market, welcoming more players and more opportunity to our form of entertainment," Fils-Aime said.
Here's a number: 69 percent of all game industry growth comes directly from the sales of Nintendo products, he said.
Another one: A third of Nintendo DS players are women. In households with a Wii, the regular players include: 95 percent of males under 25; two-thirds of men 25 to 49; one-third of women in that age group. in the over-50 age group, 1 in 8 men are playing regularly, along with 1 in 10 women.
SANTA MONICA, Calif. -- Nintendo opened with a montage of news clips and advertisements for the Wii and Nintendo DS. Then Reggie Fils-Aime, president and chief operating officer of Nintendo of America, took the stage.
"My name is Reggie and I am ... happy," he said, riffing on the introduction he gave at this show in 2004. "To us, today is more than a press conference or a business meeting, we see today as a celebration."
He said the celebration extends beyond Nintendo.
"We think this E3 marks a conclusive turning point for the video game market, welcoming more players and more opportunity to our form of entertainment," Fils-Aime said.
Here's a number: 69 percent of all game industry growth comes directly from the sales of Nintendo products, he said.
Another one: A third of Nintendo DS players are women. In households with a Wii, the regular players include: 95 percent of males under 25; two-thirds of men 25 to 49; one-third of women in that age group. in the over-50 age group, 1 in 8 men are playing regularly, along with 1 in 10 women.
SANTA MONICA, Calif. -- We're waiting on Nintendo's press conference, due to start in about 10 minutes. The setting is a bit less dramatic than Microsoft's was last night. It's a pretty standard set up inside the Santa Monica Civic Center.
The decorations Nintendo chose speak to its strategy: About a dozen pictures of people of all ages playing with a Wii remote or quizzing themselves on a Nintendo DS. There's plenty of gray hair on the models in the photos and a fair number of people with perplexed but pleased looks on their faces, as if to suggest this is the first time they've played a video game, but they actually like it.
Check back for updates as the conference gets going.
SANTA MONICA, Calif. -- We're waiting on Nintendo's press conference, due to start in about 10 minutes. The setting is a bit less dramatic than Microsoft's was last night. It's a pretty standard set up inside the Santa Monica Civic Center.
The decorations Nintendo chose speak to its strategy: About a dozen pictures of people of all ages playing with a Wii remote or quizzing themselves on a Nintendo DS. There's plenty of gray hair on the models in the photos and a fair number of people with perplexed but pleased looks on their faces, as if to suggest this is the first time they've played a video game, but they actually like it.
Check back for updates as the conference gets going.
SANTA MONICA, Calif. -- A fairly surreal moment here just now. Microsoft showed a full-length cinematic preview of the forthcoming "Call of Duty 4," an intense first-person combat game. It was loud, scary and very realistic.
Then two of the game's developers came on stage to play through a level, in which a pair of snipers infiltrate an enemy base. The audience of more than 1,000 people watched, rapt and silent, as a guy played a video game on the big screen of an outdoor high school amphitheater.
OK, I know, it's a video game conference. But still.
SANTA MONICA, Calif. -- Another significant piece of news out of the press conference: Microsoft has struck a deal to distribute movies for rent from Walt Disney Studios over the Xbox Live network in the U.S. The deal would further burnish the Xbox 360's credentials as a platform for video content.
SANTA MONICA, Calif. -- Microsoft exec Jeff Bell noted that the Electronics Arts lineup of sports games this year will run twice as fast on Xbox 360. Reggie Bush, the USC Heisman Trophy winning running back and current New Orleans Saints star, came on stage to talk speed. As the two squared off for a few plays on "Madden NFL," Bush said, "I know how you Microsoft guys try to cheat." Bush, er, the on-screen depiction of himself, then broke free for a touchdown. Bell's team? The Seahawks.
SANTA MONICA, Calif. -- In a bid to expand the appeal of the Xbox 360, Jeff Bell, Microsoft corporate vice president, announced a new controller for the console. It's designed to be easy to use and features fewer buttons than the standard Xbox 360 controller, including a big red one.
Four of these wireless controllers will come packaged with "Scene It?" a movie trivia game based on the DVD board game from Seattle's Screenlife, which we profiled in 2002. The bundled game and controllers will sell for the same price as a regular Xbox 360 game.
This was the biggest news I've detected out of Microsoft's E3 press conference so far. Peter Moore spent a lot of time recounting statistics about the Xbox 360. One number he didn't share is the failure rate of the console, which was described last week as "unacceptable" in announcing an extended warranty program and non-specific engineering fixes that should eliminate the "general hardware failure"/ "red ring of death" that has upset a substantial number of customers.
So is the Big Button a direct rival to the Wii Remote from Nintendo? Not exactly. The "Big Button" pad isn't motion sensitive. But Microsoft is clearly experimenting with a controller designed to be less off-putting to non-gamers. It's a strategy that Nintendo has shown to be very successful, as the scarcity of Wii consoles on store shelves illustrates.
SANTA MONICA, Calif. -- Microsoft opened with "five Halo fans from Libertyville, Illinois." These apparently amateur musicians heard the music of the game "and heard rock," according to Peter Moore, Xbox boss.
The band took its instruments as the movie screen lit up with a star scape. The amphitheater was lit in blue and the band began to play. A lead violinist with '80s hair started rocking out. The screen shows dozens of shots from "Halo 3," due out in September. The crowd cheered.
Moore says they're about to unveil "the biggest lineup in video game history."
SANTA MONICA, Calif. -- You walk in between the high school cafeteria and administration building. The music is thumping louder than it was at prom. A security detail that looks like it should be protecting a head of state watches from the edges. Everything is bathed in the signature green of the Xbox.
Hundreds of mostly white and Asian men are sitting in the concrete amphitheater. Many have their laptops open. Others are brandishing cameras, camera phones. A section in the middle is given over to video cameras.
A stage is set in green, black. There's a pool next to a walkway and a few dozen large chrome balls scattered on black carpet. A drum set, keyboard, guitars and a gong stand at the ready.
On a movie-theater sized screen in the middle, thousands of names -- Gamer Tags -- are displayed, presumably as they exist in the Xbox Live network: They are attached in a giant expanding tree to other names. "tude," "Cindi," "CyberCooper," "lakergrul024."
Microsoft's E3 press conference begins in half an hour. If you want to watch it live at home, you can. Details will be posted here at 10 p.m., when the news embargo lifts. We'll try to get the details posted sooner.
SANTA MONICA, Calif. -- The 9 a.m. Alaska departure from Seattle to LAX, a flight packed with people from Microsoft and other companies bound for the E3 Media & Business Summit, finally made it here about a half hour ago. Don't ask us about the emergency landing back at SeaTac.
It's cloudy and a comfortable 70 degrees here. Perfect weather to stay indoors and play/talk about video games for three days (OK, not really), which is what the 3,000 or so people arriving here from around the world intend to do.
More signs are pointing to a very competitive, and interesting, cycle for video game consoles. I've seen a lot of recent analysis of the video game industry that suggests unlike the last hardware cycle, no one console will dominate this time around.
While the Nintendo Wii is sprinting through its first full-year on the market, Microsoft's Xbox 360 has a solid lead in total installed base as a result of its early launch in 2005 (this despite the hardware problems plaguing the console). Sony's PlayStation 3 is off to a rough and costly start, but it's hard to write off a company with Sony's depth of experience in the industry. The company is already cutting prices to get back in the game.
On Monday, JupiterResearch released a new report backing the view that the current cycle will be much closer than the last one, which Sony's PlayStation 2 dominated. The report also estimates the size of the purse these competitors -- gathered here for three days to make their moves for the coming holiday season -- are playing for: potential cummulative U.S. sales of $66 billion through 2012.
A press release describing the Jupiter report stated it this way: "Competition for console households over the next five years will be fiercer than ever and will result in a close sharing of the installed base of systems among platform suppliers."
"Each platform supplier brings a special set of strengths to the market and to competition in current generation of systems," Jupiter vice president and research director Michael Gartenberg said in the press release. "On top of that we have seen a dramatic rise in the proportion multiplatform releases from independent publishers over previous generations. This is no longer the winner-takes-all market of the past."
2007 will be the high-water mark in terms of console revenue, the report concludes, with potential sales of $12.8 billion. Next year, Jupiter predicts, more than half of all U.S. households will have a video game console.
Microsoft says it has not "received any widespread reports of Xbox 360s scratching discs." That's the line from company spokesman Jack Evans, who was responding to a class action lawsuit filed in Florida.
The suit, which seeks class action status, was filed on behalf of Jorge Brouwer, a Broward County resident who bought an Xbox 360 late last year. It says that damages exceed $5 million and Microsoft has sold 11.6 million units since it was launched in November 2006.
Evans said late this afternoon that Microsoft had "only just learned of this lawsuit so we haven't had time to evaluate it."
The suit was filed by Hodkin Kopelowitz Ostrow, a Fort Lauderdale law firm. Its offices were closed when I called just now for comment.
Microsoft has a program for replacing scratched disks, but it only applies to titles the company publishes itself. Only 10 titles are currently covered by the program and Microsoft charges $20 per disc.
The suit comes days after Microsoft acknowledged an "unacceptable rate" of "general hardware failures" with the Xbox 360. Microsoft executives declined to identify the exact nature of the failures, but reports suggested the video game consoles were overheating.
Video game industry analysts I spoke with last week for today's story previewing the Electronic Entertainment Expo (E3) were fairly certain we would see a price cut from either Sony or Microsoft sometime before the holiday season.
"These guys have got to do something, or Nintendo is going to run away with this business," said Mike Goodman, director of digital entertainment with Yankee Group Consumer Research.
Last night, Sony confirmed those predictions, lopping $100 off the price of the PlayStation 3. It now retails for $499, still the most expensive of the current generation video game consoles.
Sony also rolled out an 80 gigabyte hard-drive version of the PS3. According to this Associated Press report, the higher-capacity model will be packaged with racing game "MotorStorm" and sell for $599. This model won't hit North American markets until August.
[The higher-capacity PS3] plays into the company's upcoming strategy of eventually offering downloaded high-definition movies, video games, movie trailers and demos, Sony spokesman David Karraker said.
Karraker said further details on high-def movies for download would be released at a later date.
Could that later date be, say, Wednesday morning at 11:30 a.m., when Sony holds its E3 press conference? And what might this mean for Microsoft's Xbox 360?
The company isn't tipping its hand just yet. The president of Microsoft's Japan unit, Darren Huston, is quoted in this Wall Street Journal roundup as saying the Xbox 360 has "very competitive pricing" right now. He added that Microsoft would continue to "assess market dynamics." Not clear if his comments apply just to the Japanese market or to the Xbox 360 business globally.
I'll be keeping track of the major announcements from Santa Monica this week as E3 begins Tuesday. Check back here for updates following Microsoft's press conference Tuesday night at 8:30 p.m. Nintendo goes before the cameras Wednesday morning at 9, followed by Sony.
In other news going in to E3, Sony issued an apology for a shoot-out scene that takes place in an Anglican cathedral in "Resistance: Fall of Man." According to this AP report, the game depicts a "gun battle between an American soldier and aliens inside a building that resembles Manchester Cathedral in northwest England."
Here's another story updating Nintendo's efforts to make the DS Lite an integral part of baseball through a pilot project with the Mariners at Safeco Field.
The Nintendo Wii is still flying off of shelves -- even in the middle of summer -- a development that has to have the folks at the company's U.S. headquarters in Redmond feeling pretty good going in to next week's E3 conference.
With all three next-generation consoles launched, the toned-down video game confab in Santa Monica, Calif., will likely focus on upcoming games for the holiday season. But you can bet that Nintendo, Microsoft and Sony will be touting their console sales numbers -- or spinning them -- and Nintendo has plenty to crow about.
An AP story out of Japan this morning reports that the Wii outsold Sony's PlayStation 3 at a rate of six to one in June. The Wii also outsold Microsoft's Xbox 360, according to the statistics from Enterbrain, a publisher. Nintendo seems to be succeeding in its strategy of selling the console to a broader demographic.
From the story: "The Nintendo's game console is catching on not only among children but also adults and singles," said Enterbrain spokeswoman Yuko Magaribuchi.
Sales in the U.S. are going gangbusters, too. While Friday's iPhone lines got most of the attention, people are still queuing for fresh shipments of the Wii, more than seven months after it launched. See this AP story for details, including this one: Inside a Brooklyn Toys "R" Us store, "the systems didn't even make it to the shelves before they sold out."
Bloomberg reported this morning that one of the top financial analysts covering Microsoft, Heather Bellini at UBS, expects the company to lower prices on its Xbox 360 game console heading into the holiday shopping season.
"If they really are going to have a good Christmas games lineup, then they just have to have the largest number of boxes out there so that they sell the largest number of games," said Bellini, Institutional Investor's top-ranked software analyst. She expects a price cut as early as September.
Nintendo's Wii, which was the subject of yet another success storyin the New York Times today, is pulling ahead in this round of console wars with a mass appeal and a $250 price point that's $50 less than the cheapest Xbox 360, and half as much as the cheapest Sony Play Station 3.
(In another sign of Sony's console business struggles, the company announced job cuts in its U.S. video game unit, following layoffs in Europe in April. See coverage by The Associated Press.)
The Bloomberg story has the usual "no comment" on price cut timing from Microsoft. It does quote an Xbox product manager saying that the company is "well aware that the sweet spot of the market is really 199 bucks." Xbox boss Peter Moore also chimes in, acknowledging that Microsoft needs to pursue a broader market -- much the way Nintendo has by making its console appealing to audiences beyond the hard-core gamers.
