Geek Gestalt

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.

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.

SAN FRANCISCO--An initiative in the works from the nonprofit Internet Archive to centralize the electronic distribution of commercially viable books could upend the publishing industry and declaw Amazon.com, an industry analyst said.

On Monday, the Internet Archive, which among other things has been working for some time to digitize countless numbers of public domain texts, showed the first public look at its BookServer project, an initiative its dubs, "The future of books."

Internet Archive founder Brewster Kahle told CNET News that BookServer is about creating an open system that allows search engines to index books that are available from a wide group of sources. Effectively, commercial publishers, lending libraries and even individual authors would have a way to index their work and offer easy digital distribution under BookServer, Kahle said.

Brewster Kahle, the founder of the Internet Archive, on Monday unveiled an initiative called BookServer, aimed at making all books availble for digital distribution.

(Credit: Internet Archive)

Kahle's timing is interesting. Also on Monday, the Wall Street Journal reported details on Barnes & Noble's $259 e-reader called the Nook, which will compete with Amazon's Kindle and Sony's E-Reader, a move which heats up the market. More interesting may be Google's announcement last week of its "Google Editions" store, an initiative aimed at offering digital editions of books from publishers with which it already has distribution deals. Google said that should mean about a half-million books would be available initially, either through Google itself, or through sites like Amazon.com and Barnes & Noble.

But it seems the Internet Archive is thinking even bigger than Google.

Kahle said that he's been thinking about such a project since before the advent of the World Wide Web, but that the technology has never been ready. But that's changed over the last 20 years, he said. "We've now gotten universal access to free (content)," Kahle added. "Now it's time to get universal access to all knowledge, and not all of this will be free."

He explained that BookServer is built on the notion of a Web server, and that only a good indexing system is standing in the way of making all books digitally and easily available to consumers, whether they're using a laptop computer, an iPhone, or a Kindle.

Today, he said, publishers, libraries, and others usually turn to outsiders to build them an online distribution system, and that each of those systems stands alone and unindexable. With BookServer, the Internet Archive is hoping that for the first time, consumers everywhere will be able to buy or borrow any text they want while leaving control over pricing and terms of such distribution in the hands of the content owners.

"Right now, they're largely sitting it out or dying," Kahle said of publishers and libraries. "Publishers are not dictating the terms of the distribution of their work. They're handing it over to others...This puts them back in the driver's seat."

And while Kahle imagines that BookServer would by no means result in the end of bookstores or even online booksellers like Amazon, he hopes that publishers and libraries will finally be able to set up their own distribution systems to better compete.

Though it's early days for the BookServer project, which could take several years to complete, Kahle expects that users will first look for what they're looking for on a search engine, ideally something like the Open Library, the Internet Archive's own book search system. Once someone finds the title they're looking for using their search engine of choice, they would be redirected to the publisher's site if they want to buy the title, or to a library's site if they want to borrow it.

"It will be as seamless as buying from a single store," Kahle said, "even though they'll be buying from (a) distributed (group)."

To Thad McIlroy, an electronic publishing industry analyst, BookServer is nothing sort of "incredible."

Amazon may find its business model under attack from efforts like BookServer and Google's recently-announced Editions store, not to mention the new Nook e-reader from Barnes & Noble.

(Credit: Amazon.com)

"Each time (Kahle) moves in to open up the world, he has a big impact," McIlroy said. "Between (the Google Edition) announcement and (the BookServer) announcement, this changes irrevocably the landscape, and Amazon's shares should go down tomorrow."

McIlrory was exaggerating, to some extent, but it's clear that he believes that Amazon's dominance--both as a seller of physical books and a distributor of e-books--is in serious danger if outfits like Google and the Internet Archive are deciding to take it on.

Amazon did not immediately respond to a request for comment.

"This effectively ends anyone's proprietary effort...to close off the system, as Amazon's been trying to do," McIlroy said.

Control back in the hand of publishers
One of the most important aspects of a project like BookServer is that it could, once again, give publishers the upper hand in selling their books.

"The way Amazon is really screwing up the market, creating expectations around (lower) prices, is calamitous," McIlroy said, "and very, very damaging to publishing."

Essentially, Amazon is undercutting book prices and forcing publishers to make harder choices about which books to publish and how to edit them, he suggested. But now, with both Google and the Internet Archive on the job, Amazon may ultimately "be defeated by these two."

And while Google certainly has the might to make a go of its Editions store, it has recently lost a lot of credibility in the book world with the fallout over its Google Book search project. By comparison, McIlroy said that Kahle and the Internet Archive are seen almost universally as altruistic and selfless.

"You couldn't point to anything that hurt anyone," McIlroy said of the Internet Archive's various initiatives. "Everything (Kahle) has done has been truly helpful. But now, to step into this digital book situation is really fantastic. And yes, Google, they have a real credibility problem of their own making, and (Kahle) does not have that."

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

With the release of "2012," the iPhone app tied to the forthcoming Sony Pictures film of the same name, a group of developers may have kicked off the future of games on the hit smartphone.

While the game itself is fairly simple and lasts just minutes, it incorporates features that may never have been tried before, and as such, could be among the small number of titles that are showcasing what will soon be considered par for the course.

In the minds of many industry observers, thanks to its integration of a functional operating system, an accelerometer, GPS and a camera, and the fact that thousands of developers, big and small, have released games for the iPhone, the Apple device has already surpassed Sony's PSP and Nintendo's DS as the most important, or at least most adaptable, portable gaming platform.

But as developers get more creative and as its technology improves, it's likely that the iPhone will only get more impressive as a gaming machine.

The new iPhone game, 2012, features an innovative ability to call out to people on a user's contact list for help with answering tough questions. This is one example of where features in iPhone games are heading.

(Credit: Daniel Terdiman/CNET)

With "2012," the developers at augmented reality entertainment production studio Trigger seem to have broken new ground with a couple of features. In the game, players are tasked with making their way--virtually, of course--from their real-world location to a digital Tibet. They do so by answering trivia questions related to survival, and with each correct response, they are credited with hundreds of miles of forward progress.

But sometimes the questions can be difficult, and since players get only three "lives" with which to get to Tibet, the game borrows a page from the TV game show "Who Wants to Be a Millionaire"--players are able to cash in "lifelines," and reach out to real-world friends for help with tough questions.

To do so, players can call people from their iPhone contacts list, directly from within the game, a feature that, according to Trigger president and executive creative director Jason Yim, had never been implemented in an iPhone game before.

And while from a user experience perspective, the procedure seems very simple and well-integrated, Yim said that from a technology perspective, successfully integrating phone calling from within the game was "quite complex."

By itself, the feature may not come across as that impressive, and it has some serious flaws--for example, each time someone plays the game, they must re-enter the three people they wish to call for lifelines, something that can be time-consuming for someone with a lengthy contacts list. But as a technological innovation that will eventually make its way into any number of games, the feat is both impressive and important.

Just the beginning
To Yim, however, tools like this are just the beginning of what will soon be a new wave of feature innovation, many of which will happen as developers clue in to how to take things to the next level, and others which will come as a result of new developments in the iPhone operating system itself.

For example, he pointed to the fact that Apple is now allowing Flash programmers to bring their applications to the iPhone, a move that will make it possible for many games to now be ported onto the device, and which will make it "simpler to create basic content for the iPhone."

And new innovation, exciting especially to a company like Yim's Trigger, is the emergence of new augmented reality games that double as marketing vehicles for large companies. Already, some apps for the iPhone 3GS--which, unlike the two earlier versions of the iPhone, has a built-in compass--have implemented AR, such as a secret feature in the Yelp app that lets users shake their phone three times and see restaurant names and reviews appear on the screen over the video they're watching.

But Yim suggested things will soon go beyond that. For instance, he said that an iPhone user might be able to walk up to an AR-enabled poster, point their device at it and automatically unlock some sort of prize. Similarly, a user could take their iPhone into a McDonald's, or some other partner restaurant, and get a free french fries, all because the device knows where it is, and syncs that awareness to some sort of marketing campaign. And if that was built into a game of some sort, it would give players an incentive to participate.

One-point-five Life
To Ge Wang, the chief creative officer and co-founder of hit iPhone apps Ocarina and Leaf Trombone developer Smule, augmented reality is exactly the direction that the next generation of iPhone games will take.

Wang said that the iPhone, as a device, is moving people's sense of computing into a new age, taking them away from their monitors and letting them go anywhere they want. As a result, games will be able to leverage that newfound computing freedom and blur the lines between the virtual world and the physical world.

"I think maybe for the first time, with the iPhone and all these supersmart phones," Wang said, "you have (the convergence of a couple of) things you need for augmented reality."

First, he said, is a ubiquitous computer in the hands of millions of people. And second is that that device, always in users' possession, provides consistent network connectivity and location awareness.

Add that to the fact that the iPhone, especially the 3GS, is rich in sensors, and you have the ability, more than ever, to bring connected gaming out into the open world.

"The time's never been better or more ripe for...this kind of mixed virtual reality," Wang said. "It is kind of this alternate reality, and augmented reality. It's not quite Second Life, and it's not first life. It's almost 1.5 Life."

Wang also pointed to the push notifications feature of the iPhone's OS 3.0. He suggested that game developers would be able to change the dynamic of how people play games together, and that with push, "people don't have to be proactive, they can be reactive."

In other words, multiplayer iPhone games could offer each participant the ability to take turns, regardless of where that person is, because the device can send a notification when it's time to take action. And that's just one example. It's hard to prognosticate the endless ways that this kind of tool could be implemented in games, but to Wang, this kind of feature means players can having passive relationships with the games they play to more active ones.

Smart micro-transactions
Another future game innovation is likely to be what Seth Gerson, CEO of iPhone app developer LastLegion Games, which built the official iPhone game for the film "Watchmen" called personalized in-app purchases.

Already, some iPhone games and other applications allow in-app purchases--but to Gerson, those tend to be a bland set of offerings that pay no mind to the personal preferences of users.

But that will change, he suggested, as developers get ahold of and mine new behavior data that allow them to offer players the specific kind of virtual items they want. "You can give the consumer a voice in what they're purchasing," Gerson said, "and give them better experiences."

That means, essentially, that iPhone games will be set up to determine, based on how people play, or on preferences they've asserted during play, the kinds of items the might want to buy. In a first-person shooter, that could mean offering specific kinds of weapons or armor, or different kinds of outfits in a fantasy game. The sky, really, is the limit, so long as developers think about what the data they collect mean and use it to enhance players' experiences.

Gerson also thinks there is a future for iPhone game features based on cloud computing. He said it's too early to say exactly how that will evolve, but the upshot is that developers will be learning how to automatically transform multiplayer games into solo play if someone's network connectivity is lost. Further, he said, technological advances in data distribution will mean that multiplayer games will work better even on AT&T's EDGE network and won't require 3G for seamless across-the-network play.

Given that Apple always plays its cards close to its vest, there's no way to know for sure what kinds of technological innovations are coming for forthcoming versions of the iPhone or its operating system. Much can be guessed, of course, and developers are going to have to stay a step ahead if they want their games to be relevant and exciting to players faced with nearly limitless choices.

It also matters, of course, how new innovations are implemented. It doesn't do anyone any good when new features are rolled out if the way they're done makes for a mediocre user experience. But when done right, a new feature can be disruptive and force everyone in the field to stand up and take notice.

Because the iPhone environment is so adaptable, as it should be given that it is a functional, albeit limited, computer, it is certain that there is no limit to the kinds of innovations that are coming down the line, both for games and for other kinds of apps. But given that games are one of the most popular genres of apps for the device, you can be sure that if there is one area certain to highlight the evolution of new kinds of features, games will be where the action is hottest.

Sony announced it was working on a new motion controller at E3 last June in Los Angeles.

(Credit: Daniel Terdiman/CNET)

Sony announced late Wednesday night from the Tokyo Game Show that it plans to release a new motion-sensitive controller for its PlayStation 3 video game console sometime during spring of 2010. The news came just hours after Nintendo's own announcement that it was cutting the price of its Wii console from $250 to $200.

The company originally announced that it was working on a new controller at E3 last June. That news seemed, at the time, to indicate that Sony was aiming at taking on the Nintendo Wii and its intuitive Wii-mote. Microsoft, too, unveiled a hot new controller system, code-named Natal, but revealed no substantial details about how it would be used, what it would cost or when it would be available.

As for Sony, it didn't say last June when its new device would hit the market. So Wednesday night's announcement marks the first time it has given any specificity about the date.

"The newly announced Motion Controller is equipped with two motion sensors, three axes gyroscope and three axes accelerometer that can detect the controller's angle and movement held in the user's hand," Sony said in a release. "Together with the PlayStation Eye camera for PS3 which can accurately track the absolute position of the controller, the controller can detect the natural and intuitive movement of the hand and reflect the precise movement on to the game."

Earlier Wednesday evening, Nintendo said it was slashing the price of the Wii from $250 to $200. Although both announcements were made during the Tokyo Game Show, the timing is notable given that with Sony's announcement, PS3 users and fans now have a better sense of when their favorite console will take on some additional Wii-like functionality. Nintendo may well have decided it couldn't waste any time in making its own move to protect its console.

Is this the new PS3 Slim? Rumors have it Sony may unveil such a device at the Gamescom show in Germany Tuesday. On the other hand, it may all be fanboy-driven fervor with no substance. Either way, to CNET News reporter Daniel Terdiman, the excitement is unlikely to be matched by the reality of anything Sony may introduce.

While all new technology product rumors have to be taken with a grain of salt, you can sometimes tell--often by the volume of online chatter about a particular morsel--that one is more likely to turn out to be true.

That seems to be the case with the so-called "PS3 Slim," a rumored new PlayStation 3 form factor that could well be on the horizon. And if the latest slew of blog and forum posts are right, there's a pretty good chance Sony will formally announce the new console Tuesday at the Gamescom conference in Cologne, Germany.

That may be true, and, of course, it may not. But what I want to know is why so many people seem to be so excited about this as-yet-unseen console? After all, the PS3--once thought by many to be the most likely winner of the next-generation console wars between Sony, Microsoft (with its Xbox 360), and Nintendo (with its Wii)--has lagged far behind its competitors.

In a stark reversal of the trend on display just a few short months ago--when general retail sales were plummeting even as the video games industry was still showing growth--cautious optimism in retail is now being offset by many losing months in video games.

In July, according to industry analyst the NPD Group, video game sales fell for the fifth straight month, and the year-over-year numbers are striking: In July, the video games business posted sales of $848.9 million, down 29 percent from $1.1 billion a year earlier. Year-to-date sales, reported NPD, were at $8.16 billion, down 14 percent from the same time period a year ago.

And things are only getting worse. While the industry's June numbers were down a full 31 percent from a year earlier, they still topped nine figures, coming in at $1.17 billion in June. But that means that in July, sales were down 27.4 percent from just a month earlier.

It wasn't that long ago that many people were making the argument that video games--because of their relatively low cost and many hours of entertainment value--were seen as close to recession-proof. But now, it would be hard for anyone to make that case.

Indeed, NPD analyst Anita Frazier wrote in a report Thursday that, "In order for the industry to come in flat or slightly up for the total year, the back five months of the year have to come in 11 percent (or more) higher than the last five months of last year."

That would seem to be a near impossible task, given the recent trend. But Frazier did throw the industry a bone: "While year-to-date results are weak, there are some big titles set to be released over the next several months, including Madden (10, from Electronic Arts) this month, which should help spur sales. The worst...should be behind us, and looking beyond August, we have The Beatles: Rock Band, Halo 3: ODST, and of course, Call of Duty: Modern Warfare 2 to look forward to."

Not to mention Guitar Hero 5.

One thing was also made clear in NPD's July report: sales weaknesses in the industry are being seen across the board. However, hardware led the charge, with a drop in sales of 37 percent ($280.94 million in July, 2009, as opposed to $447.71 million a year earlier). Software and accessories were down 26 percent and 12 percent, respectively.

Microsoft was quick to jump on what may have been the only bright spot in NPD's report: that its Xbox 360 was the only console to deliver growth over a year earlier. In its own report, trumpeting NPD's numbers, Microsoft pointed out that the Xbox has turned in 17 percent growth for the year over the same period in 2008.

And while Nintendo's Wii still leads the pack among the big three consoles (the Xbox, Sony's PlayStation 3, and the Wii), its lead has shrunk considerably. In July, consumers bought 252,200 Wiis, versus 202,900 Xboxes and 121,800 PS3s.

All in all, it's hard to be optimistic about the industry's prospects, though, as Frazier pointed out, there are a slew of big titles coming down the pike that could drive big sales. Still, the same is true every year, and as a result, there are few who could argue at this point that the video game business is facing what may be its biggest crisis in years.