Geek Gestalt

Call of Duty: Modern Warfare 2 is said to have broken the single-day sales record for an entertainment property. According to Activision, the game earned $310 million in North America and England alone in its first 24 hours.

(Credit: Activision)

So much for the supposedly unbreakable first-day sales record set last year by Grand Theft Auto IV.

On Thursday, Activision said that its brand-new Call of Duty 2: Modern Warfare, which hit store shelves on Tuesday, had "shattered" the previous record for opening-day sales by an entertainment property, earning $310 million in North America and the U.K. alone. That equates to 4.7 million copies of the new game sold in those regions, and, if true, would eclipse the previous first-day sales record of $310 million globally, which GTA IV set in May of 2008.

Given that GTA IV had nearly doubled the previous record of $170 million, set by Halo 3, I wondered at the time whether its new mark was unassailable. Clearly, the new Call of Duty has answered that question, and loudly.

Now, we have to ask once again whether there could be another challenger for the crown. It would be foolish, it seems, to conclude that there won't be, given the dominance of franchises like Guitar Hero, Rock Band, Grand Theft Auto itself, and, of course, Call of Duty.

A bigger question could be: Why do we care? That's especially true given how frequently these mega-records are broken. Still, it's hard not to get worked up about what it means for a single video game title to bring in hundreds of millions of dollars in a single 24-hour period, particularly while we're still mired in a fairly deep recession.

There are all kinds of arguments to be made about why video games do well in tough economic times, and I've trotted a number of them out in this space. But most games don't come anywhere near selling $310 million worth of product in their entire lifetime, let alone on their first day, so Activision--and its Infinity Ward studio, which actually developed the new Call of Duty--seem entitled to a little bit of attention.

But at the rate these records are falling, I'm going to have to start thinking twice every time a new game sends me one of these announcements about breaking records. Sooner or later, it's not going to be all that noteworthy, no matter how much money is earned in a single day. Until then, though, watch this space for word on which game will be next in line for the throne.

CNET News reporter Ina Fried testing out Microsoft's much-heralded Project Natal.

(Credit: CNET News)

According to a report issued by British games magazine MCV, Microsoft's much-heralded Project Natal hands-free gaming control system could hit store shelves as soon as November 2010 and cost as little as $50.

MCV said that Microsoft could launch Natal with a 5 million unit global shipment.

"This and other details have emerged following a behind-closed-doors Microsoft tour of U.K. publishers and studios," MCV wrote. Microsoft "has been demoing the tech and detailing its 2010 plans in order to spur more development support."

MCV also said that it had been told by a publishing source that Microsoft is "trying to get as close as possible to 'impulse buy'" with Natal.

The technology is considered very important for Microsoft as it seeks to differentiate the Xbox from Sony's PlayStation 3 and Nintendo's Wii.

The Seattle Times weighed in on the story by predicting that, "This is probably a preview of what (Microsoft CEO) Steve Ballmer and (president of the entertainment and devices division) Robbie Bach will disclose at the Consumer Electronics Show in January."

Microsoft did not immediately respond to a request for comment.

There are literally hundreds of banned Xboxes for sale on Craigslist right now in the wake of a decision by Microsoft to kick as many as a million players off of Xbox Live for illegally modifying their consoles to play pirated games.

(Credit: Daniel Terdiman/CNET)

Update (5:45 pm): This story now includes a statement from Microsoft.

Want an Xbox 360 but don't care about playing online or taking part in any of the Xbox Live services? Then this is your lucky day.

Thanks to a recent decision by Microsoft to ban as many as a million players from Xbox Live for illegally modifying their consoles to run pirated games, there is now an absolute glut of "modded" Xboxes for sale on Craigslist.

And while a brand-new Xbox Arcade--the lowest-price version of the console--sells for $200 with no free games, it is now possible to spend as little as $100 for a used, modded Xbox that comes with a slew of hit titles. You just have to be willing to give up using Xbox Live and be OK with your new game collection including mainly pirated titles.

Running a search for "modded Xbox" on Craigslist's Bay Area site returned 35 listings from the past three days. A similar search on New York Craigslist resulted in 87 listings. And dozens and dozens more are for sale on other local Craigslist sites.

One listing promised a "banned/modded" Xbox 360 with a 20 gigabyte hard drive; 20 HD movies; and 13 games including Madden 2010, Call of Duty: Modern Warfare 2, NBA 2K10, and others.

"Everything works perfectly," the ad reads. "The 360 was treated better than I treat most people."

The ad also reminded potential buyers that, "since the console is banned, you will not be able to connect to the Xbox Live service. Therefore, this posting is for those of you who don't care if you can play online or not."

One Craigslist poster named Danny Cuccovia, a 22-year-old student from West Valley College in Saratoga, Calif., was actually looking to buy a modded Xbox 360, and despite the incredible deals available right now, wasn't interested in one that couldn't get him onto Xbox Live.

A gamer looking to potentially go pro, Cuccovia suggested that modded Xboxes are great because there is no end to the supply of pirated games and that sellers of those games put very realistic-looking labels on them.

He also said he was sure that many of the people selling their banned Xboxes on Craigslist were doing so because they want to get a new one.

That was certainly the case with Kevin, a 29-year-old from Manhattan's East Village who logged into Xbox Live a few days ago only to discover the bad news about his console.

"I logged in, tried to play a game online, and it said I had been banned from the service for violating the terms of service," Kevin, who wouldn't give his last name, said. "I cursed, put my controller down, cursed Microsoft, and then bought another Xbox."

But even though he bought another used console that was advertised as being unmodified, Kevin said that when he tried to log on to Xbox Live, he quickly discovered he'd been cheated: the new device had been banned, too. So on Tuesday, he bought another one.

"If you're interested in a modded Xbox," he said, "I've got one for you."

Interestingly, Kevin and another New Yorker with a banned Xbox, 16-year-old Muhummad Sheikh, both said that the ban seemed to apply only to the console and not to their Xbox Live accounts.

Kevin said that his account still works, and that he was able to keep all his achievements, but he lost all the saved games. "They've done something funny," he said. "They call it a corrupted profile."

For sellers like Kevin, the rush to sell their banned Xboxes in order to buy a new one is pitting them against dozens, if not hundreds of people in the same boat. That means that getting the price they want is going to be near impossible. Kevin said that he had originally asked for $175--with an available legitimate copy of Rock Band for an additional $50--but has now dropped his price to $150. And still he has no bites.

"Someone (offered to) buy it for $100," Kevin said, "but I haven't capitulated yet."

In a statement issued late Wednesday to CNET News, Microsoft suggested that players who buy used Xboxes should beware that the company doesn't necessarily stand behind the consoles.

"If you purchase a modified console second-hand, the warranty is not transferable and the purchaser assumes the risk for any previous modifications," the Microsoft statement said. "If you purchase a console that has been previously banned, you will not be able to connect to (Xbox) Live."

To Kevin, the fact that the consoles have been banned but players' accounts still work smells a little fishy since that means if someone buys a new Xbox, they'll be able to get right back into their Xbox Live account and pick up, more or less, where they left off. And that could well mean that for the Xbox Live obsessed, there's no choice but to buy a brand-new machine, especially since many of the other consoles for sale on Craigslist right now have also been banned.

"Well, the holidays are around the corner," Kevin said. "They know what they're doing when it comes to making money."

Update (5:50 p.m.): This story has been updated with a statement from Microsoft.

It's oh-so enticing: you find a copy of a brand new game like Call of Duty: Modern Warfare 2 on a pirate site and the temptation to download it is too strong.

Well, that temptation may have cost up to 1 million users of Microsoft's Xbox Live the ability to use that service. According to a report in InformationWeek, Microsoft has banned as many as a million players from Xbox Live for altering their consoles in order to play pirated versions of games.

This week, Activision's new Call of Duty was released, and InformationWeek speculated that because pirated versions of the game appeared on various sharing sites in advance of the release, the game's developer may have exhorted Microsoft to enact the bans.

"Xbox 360 consoles are equipped with digital rights management technologies designed to detect pirated software," InformationWeek wrote, "but some players have successfully 'modded,' or modified, their machines to circumvent DRM protections."

Even if someone has been banned, their Xbox will still play offline games, InformationWeek said. But it's not at all clear if the bans are permanent or if Microsoft will allow those who have been booted from Xbox Live to return at some point down the line.

In a statement Microsoft said its "commitment to combat piracy and support safer and more secure gameplay for the more than 20 million members of the Xbox Live community remains a top priority. All consumers should know that piracy is illegal and modifying their Xbox 360 console violates the Xbox Live terms of use, will void their warranty and result in a ban from Xbox Live. We can assure you that if an Xbox Live member follows the Xbox Live terms of use, purchased a retail copy of Modern Warfare 2 and played the game on an unmodified Xbox 360, no action will be taken."

And on the Xbox support page, Xbox Live Director of Programming Larry Hryb, aka Major Nelson, has addressed some of the circumstances that could lead to a player's being banned.

"Players who find their Gamertags banned from Xbox Live have wound up in that situation due to violations of the Xbox Live Terms of Use," Major Nelson wrote. "The Xbox Live team monitors players for not just cheating, but also for things like threats, racism, profanity, and just being an all around poor sport and ruining the game for others.

"When a Gamertag comes up as violating our policies for online behavior, the person who owns that Gamertag is punished by being banned from the service. Keep in mind, this isn't just a ban on a particular game. This is a ban on the Xbox Live service as a whole, so you won't be able to go online at all during your ban. Initially, you may be banned for a day, a week, or depending on severity, permanently! Kiss that $50 goodbye."

In a world in which Disney defines its brand and the content it releases under its own name as being aimed at the broadest possible audience, Mickey Mouse is known largely as a feel-good, happy-go-lucky cartoon character.

But that's not how Mickey was in the early days. Back in 1928, when he first hit the world stage, he was a very badly behaved mouse. And now, one of the best-known video game designers in the world wants to bring back a little of bit of Mickey's dark side.

And he'll get his chance to make that a reality. Warren Spector, the game designer behind the Deus Ex franchise, is working on a new game, Disney's Epic Mickey, which is being positioned, in part, as a "re-imagining" of Mickey Mouse.

Images: Mickey Mouse, behaving badly

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Planned for a fall 2010 release, Disney's Epic Mickey will be an adventure-platforming game exclusively for Nintendo's Wii. The story is built around a world--crafted by the sorcerer from The Sorcerer's Apprentice--in which a series of forgotten Disney creations live, and thrive. Among those characters is Oswald, Walt Disney's earliest cartoon star. As the years pass and Oswald becomes bitter at Mickey's success, Mickey inadvertently destroys Oswald's comfort zone in the cartoon wasteland and he must face the consequences of what he has accidentally wrought.

"It's a game where we remind (people) that Mickey is a hero who solves problems by dynamically changing the world around him and deciding how to interact with the people and places and problems he encounters in this strange new world," Spector said.

In 2005, Spector formed a start-up, Junction Point, which Disney bought when it commissioned him to work on the Mickey Mouse game. "I've wanted to work for Disney forever," he said, "so that was not a stumbling point for me at all."

And because Spector is a lifelong Disney fan and animation "freak," everything came together in 2007 for him and his Junction Point team to take on perhaps the best-known cartoon character of all time. On Tuesday, Spector talked with CNET News about the project.

Q: How did you get involved?
Warren Spector: I was out pitching a near-future science-fiction game and an enormous epic fantasy role playing game, and my agent suggested we talk to Disney. They turned things around and asked me if I wanted to a Mickey Mouse game, and I told them no, because I don't do kids games and Mickey's been kind of a kid property for a long time. But they said, No, no, we want someone to bring Mickey to a gaming audience in a whole new way and make him a hero for the 21st century. Pretty much at that point, I was in.

What was it like to get a chance to re-imagine Mickey Mouse?
Spector: How often do you get a chance to work with the most recognizable movie star character property on Earth? That's an opportunity most people never get. There was pretty much no way I could say no. Mickey touches everybody, and none of us will ever meet a human being who doesn't know about this character.

What's the best-case outcome for this game, in your fantasy?
Spector: The best case is to change the way people think about Mickey Mouse. He's not just your 8-year-old kid's best buddy, or a character who teaches infants colors on Mickey's Clubhouse. He's a hero again. In his early days, he appealed to every body. From 1928 to the mid-1930s, moviegoers around the world, everybody, men, women, old, young, you name it. Everybody loved Mickey. And the opportunity to bring him back to that place, where he's not just an icon on a watch or a T-shirt, but is actually a character that people care about in a narrative context, or want to be, to look up to as a character whose skin they want to inhabit for awhile, Boy, I can't think of a better (challenge) for someone who tells stories and makes games for a living.

The logo for Disney's Epic Mickey.

(Credit: Disney Interactive Studios)

Why does Mickey need re-imagining? And why now?
Spector: There's these characters, like Mario and Link (from the Zelda games) and Sonic, and I don't know if it's true, but you've got to believe that those characters--who are three heads tall and cute and iconic--at some level were inspired by Mickey Mouse. So why shouldn't Mickey be at the top of the gaming heap? Mickey deserves to be at the top of the game hero pyramid.

What are some of the things you're doing to make this new Mickey recognizable for everyone?
Spector: I came into this with a pretty good idea of who Mickey was. I wanted to remind Mickey that it's okay to be mischievous and badly-behaved. For so many years, he hasn't been allowed to do anything remotely mischievous. But if you go back to those early cartoons, he was very badly behaved, and we've got to let him get back to that. And in his early cartoons, he was very cartoon-y, he squashed, he stretched. He could remove his tail and use it as a sword. That was the second thing. And the third leap was mischievous cartoon character made of paint. So we talked about what we could do if we gave Mickey control over the stuff that he's made of and let him paint and then use paint thinner to remove stuff.

Were there other things that were essential for bringing Mickey to this medium?
Spector: One major challenge was finding a look for him, especially a 3D look. With a couple of rare exceptions, Mickey's always been in 2D and the animators cheated all the time, with the way his ears work and the way his nose fits relative to the rest of his face. In 3D you can't do that, so I looked at the few previous 3D Mickeys and I didn't feel anybody had gotten it right. We went through probably thousands of concepts trying to find the right look.There are a lot of people at Disney who care a lot about Mickey Mouse, and so getting a look that people could get behind was tough. Rendering it in 3D was tough and then getting it to move like a cartoon character was a huge challenge and tons of fun, and you'll tell me if we succeeded.

Warren Spector, lead designer on Epic Mickey.

(Credit: Disney Interactive Studios)

How much control did you have and how much control Disney assert?
Spector: I was really worried about that when I first started on this. There are lines you don't cross with Mickey Mouse, OK? But the thing that surprised me was how far out those lines were and how obvious it is where the lines really are.

There are people who say, 'Oh, give Mickey a big knife and put a gun in his hand, and then I'll like him.' Well, come on, nobody's going to do that. And you're not going to make Mickey evil, you know? And when you have an icon, where any combination of three circles defines Mickey Mouse for most people on the planet, you're not going to make his head square. I'd say it was a pretty easily negotiated deal, creatively.

Talk more about where the story idea came from?
Spector: During a meeting with the Disney guys, they showed us a PowerPoint with the concept of cartoon wasteland, a world of rejected and forgotten Disney creativity. And the foundation was making Mickey relevant to a gaming audience and a modern audience. It was funny because I watched this presentation thinking, Holy Cow, this is phenomenal and the seed of an amazing thing. And then all the execs were saying, Oh, you don't have to use any of that, this is just our think tank's concept. And I'm sitting there, going, Are you guys crazy. That's a great idea. Why would I not use all of that? I just thought it was so funny because they were trying so hard to make it clear that I had all this creative freedom, and I was like, No, I don't want it, I want this as my starting point.

Can you tell me something about working with these famous Disney characters that would surprise us?
Spector: I think the thing that surprised me the most is how easy it is to get these characters almost right. It's like, drawing Mickey or any other character in the Disney archives, they are so well known and defined and recognized and have such strong personalities that getting them 90 percent right is very easy. But that last 10 percent that just nails them, that's really, really hard. And that goes for how they look, and how they act and how they move, which is one of the reasons why I was so proud of my animators. I didn't tell them to do this. They came up with this idea on their own, of going back to the old cartoons, and rotoscoping them. They took the old cartoons and took our model and rig and then duplicated classic 2D animation, and composited our guy into classic Disney 2D cartoons. When you couldn't tell if it was our model or the original 2D animation, that was when I knew we had it.

Why only the Wii?
Spector: At the beginning, it was supposed to be on all platforms. I remember vividly how nervous I was about that. The idea was we were going to do a Wii port and I was never comfortable with that because the Wii really deserves its own design, something that takes advantage of what the Wii does best. We were talking about this one day and (Disney Interactive Studios executive vice president) Graham Hopper basically said, What does it take to ensure quality? I said, you can never guarantee greatness, but you need enough time and money to be competitive and it helps if you can focus. A single platform would be great. And it was an easy step from there to, Hey, we should do a Wii exclusive.

What about the Wii "stalling?" Does that worry you at all?
Spector: Yes and no. I've been doing this for 20 years, and I've had this saying, That I just need to sell one more copy of a game than is necessary to get my publisher to fund my next one. So I'm looking at this as, I've got a responsibility to Mickey Mouse and to Disney, and if I do something really good, commercial success will follow. I've got to believe that. And once you start talking about painting, people's hands (on the Wii) just immediately start moving as if they're holding a brush. It just totally works. I think we're on the right platform.

People always talk about dog years, or cat years, but what about video game console years?

It's hard to know what that math is, but one thing is certain: Sony's PlayStation 2 turned 9 years old Wednesday, and it sure feels like the best-selling video game console of all time has been around a whole lot longer than that.

Yet even though we're already more than three years into the PlayStation 3/Xbox 360/Wii console generation, the PS2 is still going strong. Routinely, month after month, its sales are in six figures--146,000 in September in the United States alone, according to The NPD Group--and there's no reason to think the 485 (and counting) developers who have made games for the platform are going to stop any time soon.

The PS2 turned 9 on Wednesday. What's that in video game years, if dog and cat years are equal to 7 human years?

(Credit: Sony)

In large part, that's because there are millions of people for whom the world-beating processing power of the PS3 and the Xbox 360, and the graphics-so-good-you-can-see-beads-of-sweat-on-sports-players'-bodies aren't worth paying several hundred dollars for. For $100, they say, you can get one heck of a good video game playing experience with a PS2.

It "still holds a place in my heart--there's so many great games with huge amounts of replay value," said Michael Steavenson, a public relations professional who bought his PS2 around 2001. "I'm not so interested in blazingly fast processing speeds, graphics that make games look like a movie, or uber-cutting-edge hardware stats. If the game is well-designed, fun to play, and provides me with a good emotional connection, I'll play it forever."

According to Sony, one out of every three U.S. households owns a PS2, and, worldwide, almost 140 million people have one. To date, Americans have bought more than half a billion PS2 games, and all told, nearly 10,000 titles have been released for the platform. Not bad for a machine that has earned the right to be living out its golden years sitting on a porch somewhere, smoking a cigar and grumbling about kids these days.

The PS3 Slim, the newest iteration of the PlayStation 3, comes with the lowest price ever for the PS3: $299. Because of the price cut, the PS3's sales rose in August and September, and many people see signs of a resurgence for the console.

(Credit: Sony)

Is Sony's PlayStation 3 at long last ready to stop being its rivals' punching bag?

With its first-place finish in September in number of units sold, Sony finally has a tangible response to persistent criticism that its PS3 can't keep up with its next-generation video game console competitors, Microsoft's Xbox 360 and Nintendo's Wii.

For the month, according to video game analysts at the NPD Group, Sony sold 491,800 PS3s in the United States, while Nintendo moved 462,800 Wiis and consumers bought 352,600 of Microsoft's Xbox 360s. It was the first time since the next-generation console wars began in earnest nearly three years ago that the PS3 finished a month on top.

Yet, as everyone knows, a single positive piece of data does not a trend make--something Sony's competitors are quick to point out--especially when the existing trend is so contradictory. So, on the heels of those rosy-at-long-last September numbers, and the August price cut and launch of the new PS3 Slim that preceded them, can Sony finally demonstrate conclusively to its detractors that it is through being badly outmaneuvered?

According to a group of experts interviewed for this article, the answer appears to be yes. No one will yet predict that Sony is ready to grab hold of the leadership position it enjoyed in previous console generations. However, there does seem to be widespread agreement that for the first time since its November 2006 launch, the PS3 is ready to seriously compete for that role.

"I think that the fact that they did introduce a new footprint for the PS3 (the Slim) and a lower price point, coupled with some of the really high-demand games" coming out for the platform, "could really prime the pump for Sony to have a resurgence for the PS3," said Brian Crecente, editor of the popular video game blog Kotaku.

"I do think that we are probably going to see, if not it topping the charts leading into the holiday, it...doing better than it has in (the recent) past," he said.

Beginning a comeback in a hole
There's no doubt, however, that Sony is beginning any PS3 resurgence in a rather sizable hole. Since the start of the current console generation (in November 2006 for the PS3 and the Wii, and November 2005 for the Xbox 360), Sony has sold 25.26 million PS3s worldwide and 9.76 million in the U.S, according to VGChartz, a Web site that aggregates video game sales data. By comparison, the Wii has moved 54.19 million units worldwide, of which 25.05 million were in the U.S., and Microsoft--with its one-year head-start--has sold 32.51 million Xboxes, including 18.66 million in the U.S.

By those measures, the PS3 has a minimum of a 2-1 disadvantage, in the U.S. at least, when it comes to the PS3 install base. That fact puts pressure on third-party developers working on games for the console because they know that there are at least twice as many Xbox buyers in the U.S. as there are for the PS3.

That dynamic, in turn, has led to one of the biggest complaints over the years about the PS3: that the software lineup has paled in comparison to that of the Xbox. To be sure, Sony has always disputed that notion.

Hard to prognosticate
Over the last three years, this space has been home to multiple arguments that the PS3 would one day emerge as the clear-cut winner of the next-gen console wars. But there's also been plenty of room here for the theory that Sony's flagship video game device was doomed to languish behind the Xbox and the Wii.

Clearly, prognostication about the PS3's fortunes has been difficult. And with the state of the economy in flux, supply chains always hard to analyze, and consumers' whims ever-changing, there's no way to know for sure how the console wars will go from here on out.

But Sony definitely feels like it's finally in the driver's seat.

"Overall, we're just hitting a stride that just (reasserts) what we knew all along--that there's tremendous value under the (PS3's) hood," said Julie Han, Sony PlayStation spokesperson.

That's a notion that video game industry analysts agree with. Yet when talking about Sony's laudable September numbers, they also point, first and foremost, to the fact that there were a lot of consumers sitting on the sidelines, just waiting for the company to lower the PS3's price. In August, with the release of the $299 PS3 Slim, Sony did just that.

"It's really a combination of pent-up demand and (the point) where value and pricing meet," said Jesse Divnich, an analyst with Electronic Entertainment Design and Research. "The (thing) about the PS3 was, it was really a system ahead of its time. Developers didn't really have the capabilities to take advantage of all the power in the PS3, and at the same time you had systems like the Wii, which just had perfect timing. But now, (the PS3) has caught up."

That means, Divnich continued, that the time has finally come where the PS3's jam-packed collection of a powerful video game console, a Blu-ray player, and built-in Wi-Fi met consumers' needs, even as the price dropped to where large numbers of people feel they can afford it. The lowest-priced Xbox costs $199, while the Wii runs $249.

Finally hitting a 'sweet spot'
Divnich said that at $299, the PS3 has finally hit its "sweet spot." And he said while it's likely the initial boost of sales that came as a result of the August price cut will slow down, "Long term, into 2010 and 2011, I don't think the PS3 is going to be in last place to the degree it was before. The gap between the systems will be much smaller."

For his part, Wedbush Morgan analyst Michael Pachter said he expects the PS3 to outsell the Xbox during the holiday season because of the perceived value of the $299 PS3, loaded as it is with the Blu-ray player and Wi-Fi. He and others do, however, still think that Nintendo will sell more Wiis because of the broader general appeal of that device and the fact that it is seen as a better Christmas present.

"Is Sony back? Yeah," said Pachter. "Are they back as the leader? Probably not. Are they back in second? Probably."

Another analyst, Lazard Capital Markets Senior Vice President Colin Sebastian, also attributed the September PS3 sales boost to the "pent-up" demand for a lower price, and said that there would have been serious trouble for the console if the results had not been so good.

"If they had not shown the uptick with the price cut," Sebastian said, "then we'd all be putting a nail in the coffin for (the PS3). But what we're seeing is that there's still life left for the PS3, and that's an encouraging data point (for Sony)."

Still, as Pachter put it, "Microsoft is not the type of company that's going to stay (down) for a long time. They don't like it."

That's why, Pachter said, if the PS3 can keep pace with the Xbox for the next few months, there's a good chance that Microsoft will drop the price of its console another $50 sometime early next year, a move he doesn't think Sony would be able to match.

To be sure, Microsoft wouldn't easily cut the Xbox's price--"they're certainly not going to give money away just for the hell of it," Pachter said--but it is an arrow in their quiver.

Sebastian said he, too, could see an Xbox price cut next year, as well as one for the Wii. Would Sony follow suit if its rivals did so?

"They could do it," Sebastian said. "It's just a matter of what their tolerance is for absorbing less revenue on the hardware side, and whether they can make up that revenue on the software side."

According to Xbox spokesman David Dennis, a price cut is just one of many things Microsoft would consider as a way to keep pace with the market. He said other possibilities include different hardware and software bundles. "There's a lot of different levers you can pull," Dennis said.

Not surprisingly, Dennis is dismissive of the PS3's sales boost. He agreed that there were a lot of people waiting to buy the console at a lower price, but said that the impressive initial jump in units sold came as a result of early leaks of pictures and information about the PS3 Slim, and so there were "months of pent-up demand."

Further, he predicted that Sony would not see a sustained resurgence for its console and that even in September, when the PS3 outsold the Xbox and the Wii, Microsoft brought in more revenue for the entire Xbox ecosystem--including accessories, software, and fees for online services--than did Sony.

The two halves of 2010
In the end, most people seem to agree that the overall fortunes of the consoles have as much to do with software as price. That's why each of the analysts talked to for this story pointed to a bright future for Sony: They see a lot of strength in the PS3's coming games lineup, which includes titles like God of War III and Gran Turismo 5. And then there's also Sony's PlayStation Motion Controller, which could bring the PS3 more Wii-like functionality.

That's why Divnich said he thinks that the PS3 is likely to dominate the first half of 2010.

But he also expects that Microsoft will release its highly anticipated Project Natal motion-sensitive controller in the second half of 2010, a move that could stir up the console pot anew. Indeed, Divnich said he thinks that the Xbox will once again overtake the PS3 at that point.

And after that? It's anybody's guess.

For the first time, the Sony PlayStation 3 was the monthly top-selling video game console, a mark that has been nearly three years in the making for the much-maligned platform.

According to video game analyst NPD, Sony sold 491,800 PS3s in September, beating out Nintendo's Wii--which moved 462,800 units--and Microsoft's Xbox 360, which came in last at 352,600 units sold for the month.

The PS3, the newest iteration of Sony's next-generation video game console, finally won the top slot in a monthly sales report, thanks to the platform's lowest price ever.

(Credit: Sony)

For Sony, the news seemed to prove that many would-be PS3 buyers had been waiting for nearly three years to get one of the consoles at a price more in line with what Nintendo and Microsoft charge for their devices.

In August, Sony unveiled the $299 PS3 Slim, which got the platform under the $300 level for the first time. The Wii currently runs for $199, and the lowest-price Xbox goes for the same.

Based on the PS3 price cut, some analysts had been predicting that the console would finally come out on top when NPD released its September numbers. Indeed, Wedbush Morgan Securities analyst Michael Pachter was proven right when he suggested that price cuts for all three consoles would most benefit Sony. He even said that he thought it is possible that the PS3 will outsell the Xbox for the rest of the year, which, if true, would be a major blow to Microsoft's video games group.

Sony would do well to temper any crowing. Its first one-month victory came after nearly three years, and clearly demonstrates that many buyers felt the console was too expensive previously. The PS3 was originally released with a top price of $599.

Still, the September results are big news for Sony and could be a sign that things are finally turning around for the beleaguered PS3. ... Read more

Microsoft is getting ready for a November release of new Facebook, Twitter, Last.fm, and instant movie and TV show streaming features in Xbox Live.

(Credit: Daniel Terdiman/CNET)

SAN FRANCISCO--At a star-studded E3 press conference last June, Microsoft touted, among other things, a plan to bring Facebook, Twitter, and Last.fm to its hit online service, Xbox Live, as well as to begin offering instant streaming of movies and TV shows.

At the time, all Microsoft would say is that it hoped to roll out these new features to the public in the fall.

Well, it's now the fall. And on Wednesday, my colleague Josh Lowensohn and I got a first-hand look at the pre-release Xbox Live implementation of Facebook, Twitter, Last.fm, and video streaming, and had a chance to talk to Xbox Live General Manager Ron Pessner about it all.

Photos: Twitter, Facebook, Last.fm almost ready for Xbox Live

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Microsoft is still not ready to let the public in on the fun yet, and today is only willing to give the launch a November timeframe--with no actual date announced. Further, since E3, the so-called InstantOn streaming feature has been rolled up into a larger Zune branding effort, something that I think is a big mistake, given the cool reception the Zune name--at least as it applies to Microsoft's music player--has received in the marketplace.

Regardless, it's clear that Microsoft is nearly ready to start letting the Xbox Live community get its hands on the Facebook, Twitter, and Last.fm features, and to begin streaming video content rather than waiting for it to download, which has been a slow, frustrating process by all accounts.

Pessner began by talking about Facebook. Clearly, Microsoft's interest is in getting the feature up and running and letting Xbox Live users begin to access the popular social network on their TVs sooner, rather than later, even though some fundamental elements of Facebook haven't been included.

According to Pessner, a chief goal of the implementation was to make it easy for users to make photo slideshows and watch them on their TVs. A quick demo revealed that much of the Xbox Live Facebook tool is built around looking at photo albums, scrolling between friends' albums and seeing who on a user's friends list has added photos to their account.

But one of Facebook's most fundamental offerings is photos and allowing users to upload them. And Microsoft has chosen, for now at least, not to let users do that. Pessner says the decision was made that Facebook on Xbox Live is about viewing images, and that anyone who wants to upload them to the social network will do so via the Web. It's a fair point, but it does seem like a major omission, and it would seem like something Microsoft will have to address soon.

Pessner also pointed to what he called Friend Linker, which is designed to help Facebook users see which of their friends are Xbox Live members, and vice versa. Among other things, it makes for an easy way for Facebook users to discover friends' gamertags and to invite them to be friends on Xbox Live.

All in all, while it's likely that many Xbox Live users will find themselves switching over to the Facebook application frequently--why move over to a computer if it's not necessary?--it's clear that there is a lot of room for more. The interface is consistent with everything else on Xbox Live, something that may please some. But frequent Facebookers might find it confusing to have to use Facebook in an entirely different format. Only time will tell.

Twitter on Xbox Live
Pessner then showed off the Xbox Live Twitter application. Like its Facebook counterpart, the interface will look very familiar to Xbox Live users. Pessner said the idea was to design a Twitter experience for the living room.

That means, of course, a fairly scaled down Twitter app. Users can post their own tweets, view friends' tweets, re-tweet them, favorite them, look at profiles, @ reply to others, and do Twitter searches. And that's about it.

To be sure, there aren't that many more features available to Twitter users elsewhere, but there are some. Again, Pessner made the argument that the idea was to optimize the experience for a living room TV and that to access a full range of features, users will happily turn to their computers.

One thing missing from both the Facebook and Twitter applications, however, is the ability to click on URLs, something that is a major piece of the social-networking puzzle these days.

Asked why not, a Microsoft spokesperson said, "That's not something we support right now. Today we're focused on delivering a great Twitter and Facebook experience which connects the Xbox Live community to friends in new and unique ways...This is just the beginning, and the great thing about Xbox Live is that we can evolve and update features based on the community's feedback."

Last.fm
The third piece of the new Xbox Live puzzle is its Last.fm application. Last.fm (which is owned by CNET News parent CBS Interactive) is a music service aimed at helping users discover new songs and artists--something Microsoft is hoping will add to users' overall Xbox Live experience.

Pessner said that adding Last.fm gives users access to a wide range of new music and music-related tools, much as adding Netflix to Xbox Live last year did for movies.

As with the Facebook and Twitter tools, Xbox Live users will find a scaled down version of Last.fm, one that Pessner said is focused mainly on music consumption, "but also on discovery."

Again, the tool has the familiar Xbox Live look and feel, and appears to be something that will expand some users' musical horizons. But it's also clear that what this is a simpler version of a service that's been optimized for a TV, and those who want the full experience will return to their computers.

And that's fine. No one is expecting Microsoft to replace their computer with Xbox Live, though I'm sure Microsoft would like to do so someday. If, for example, it ever put a full-featured Web browser inside Xbox Live, some of the missing features mentioned above could be addressed. But that's a conversation for another day.

InstantOn
The last new feature is the InstantOn streaming service that Xbox Live users will have access to. The idea is to give those buying or renting TV shows or movies through the Zune video marketplace (formerly known as the Xbox Live video marketplace) instant gratification instead of making them wait for their content to download.

The service will offer full 1080p high-definition movies and TV shows, and will let those who purchase content watch it right away or download it to their Xbox, a Zune player, or a PC. Those who rent content will be able to stream it and will have 24 hours to finish watching it once they press "play."

Pessner pointed to the fact that the service is designed to auto-detect a user's bandwidth level in order to play back the content in an appropriate quality. The idea there is to ensure that a user gets to watch what they want right away, regardless of how fast their connection is.

From Microsoft's perspective, this new set of offerings will make the Xbox an even stronger entertainment option than it has been in the past. But Pessner said there is still much more that can be added to the platform.

He wouldn't say what the next steps would be, of course, but did paint a broad picture, suggesting that users can draw their own conclusions of how Project Natal, Microsoft's forthcoming gesture-based control system for Xbox and PC "can light this up."