According to the expected year-end box-office data figures compiled by Hollywood.com, the industry raked in $10.1 billion for 2011 in North America.

While that seems like a nice haul, it’s 4.5 percent less than in 2010. While not enough to result a major downturn in limo-riding and Botox, the results are likely to cause entertainment moguls some worry, since they are accompanied by continuing trends, including another year of lower attendance.

And given that the revenue was unusually bolstered by more higher-priced 3-D movie-ticket prices — Hollywood released several dozen 3-D films in 2011, double the previous year’s amount — the latest numbers are even more disappointing.

While some holiday movies did well — namely “Mission: Impossible — Ghost Protocol,” which has taken in about $70 million domestically since its opening less than two weeks ago — it pales in comparison to such digital hits as Activision’s Call of Duty: Modern Warfare 3 videogame, which pulled in $400 million in one day from the much-desired youth market.

It surpassed $1 billion in sales in 16 days, eclipsing the box office of the blockbuster movie “Avatar,” which took 17 days to gross seven figures.

Does that mean that the continued competition for the leisure time of pretty much everyone between digital and analog has gotten worse — an epic battle of the movie industry versus game players, tablets and smartphones?

Or is it because so many movies made in 2011 turned out to be just awful? (If you saw “New Year’s Eve,” you’ll know exactly what I mean.)

One thing is clear: No one is going to pay for poor-quality content, no matter the screen size.

More number-crunching to come, as the industry debates the issue into 2012 (coincidentally, the title of a movie I happened to like, as you can see below!), and at the upcoming D: Dive Into Media at the end of the month, down near Los Angeles, in the belly of the Web-smacked beast.

Until then, let’s hope it does not come to this next year:

At that rate, the Santa Monica, Calif.-based company says it has eclipsed sales of the blockbuster movie “Avatar,” which took 17 days to gross seven figures.

The bloody first-person shooter, which operates across all consoles and on the PC, went on sale Nov. 8.

The game took only five days to gross $775 million and to shatter all entertainment sales records, including movies, books and videogames.

For perspective, Electronic Arts’ Battlefield 3, which is going head to head against Activision’s Call of Duty this season, has sold eight million copies of the game, according to Game Informer. EA hasn’t disclosed total sales figures.

Additionally, NPD expects strong sales of Call of Duty to break videogame records for the month of November.

Activision says the Call of Duty community has more than 30 million gamers, putting the franchise on the scale of other entertainment megafranchises, like “Harry Potter,” “Star Wars” and “The Lord of the Rings.”

The $60 game is accompanied by Call of Duty Elite, an online component that allows players to compete against each other for a chance to win prizes. Activision says six million players have already registered for the free or premium plans, with more than one million paying for access that costs $50.

The release of Avatar … represented the pivotal moment for digital cinema, with digital technology forming the bedrock of the modern cinema environment.

— David Hancock, an analyst with IHS Screen Digest, names Avatar as the major catalyst in the accelerating decline of 35mm celluloid.

In one demo, we got to see more details about the Avatar Kinect feature that Microsoft CEO Steve Ballmer demonstrated at the Consumer Electronics Show in Las Vegas last month. In the first video below, a member of Microsoft’s development team showed how she could host a virtual “talk show” with two other live participants.

In the second, Craig Mundie, Microsoft’s Chief Research and Strategy Officer, shows a video sampling of work done by enthusiasts and hobbyists using the Kinect for things like simulating a light saber from Star Wars to driving a toy helicopter. The videos show projects that people did on their own without any official help or support from Microsoft.

Sensing opportunity, Microsoft said today that it will release a software developers kit for the Kinect to academics, hobbyists and enthusiasts, but not yet for commercial developers.

Meanwhile, Microsoft’s own researchers have been hard at work trying to figure out other things that the Kinect might be useful for. One of them may one day have something to do with creating 3D digital renderings of the environments we live in. In another demonstration we weren’t allowed to photograph or film, a Kinect took a series of images of a bunch of reporters sitting on a couch around a coffee table with a lot of stuff on it: toys, a telephone, a plant, a vase. The resulting image looked a little like something out of the ancient Roman city of Pompeii. We could see detailed 3D rendersings of everything on the table, and of ourselves that increased in detail as the minutes passed. I was wearing a scarf and after a minute or two I could see its wrinkles, yet the renderings looked as though everything were covered with a layer of dust or snow.

During this demo, one interesting effect occurred when someone got up and walked away from the couch. On the screen, that person seemed to melt away a little at a time. Then he returned to the same place, and he slowly re-materialized into the scene as if he had just been beamed back into place by the Starship Enterprise.

This is all just at the research and experimental phase right now. But the work could one day lead to a future version of the Kinect where the avatar is a more photo-realistic version of yourself, and not a cartoon-like representation, as seen in the talk show video below. Plus? Our more realistic avatars will meet in more realistic looking environments that closely resemble the real thing. Imagine what you could do with that in the fields of communication, entertainment and others. You could use it make a detailed model of a room in your home to try and figure out how things would look redecorated.

This is all part of a theme of research at Microsoft into natural user interfaces that will one day replace the graphical users interfaces we’re so used to on the Mac and Windows today.

Avatar Kinect Demo from Arik Hesseldahl on Vimeo.

Kinect Development projects from Arik Hesseldahl on Vimeo.

Then again, it’s been headed that way for quite some time–it’s just that News Corp. (which also owns this Web site) is now being that much more forthright about it. News Corp. COO Chase Carey said today that the company is “actively engaged” in discussions about “strategic alternatives”.

Which is exactly what the company said a few weeks ago, shortly after laying off several hundred workers.

The only difference today was that Carey said it in an earnings call, not via a public relations proxy, and it seemed clear from his tone that the company is done with the social network.

When an analyst asked about his projections for Myspace’s losses for the remainder of the year, you could hear the surprise in his voice, when he reiterated that the “focus is on strategic options.” And asked again about timing for a decision, he said that the company was “actively engaged” in discussions.

That is: Make us an offer.

For the record, News Corp.’s $275 million charge on its digital operations, announced today, breaks down this way: $107 million of that is for the restructuring, and the remaining $168 million is a writedown, presumably focused on Myspace.

And for those who care, costs for the Daily are being assigned to News Corp.’s publishing group: $7 million of the $30 million it has spent so far were assigned to this quarter.

EARLIER:

It’s an all-News Corp. kind of day around here. Jumping on the company’s earnings call, where we’re certain to hear about the just-launched Daily tablet newspaper, along with details about the company’s $275 million writedown on its digital businesses.

(Once again: News Corp. also owns this Web site. I don’t think we’ll get mentioned during the call, though.)

4:34 pm: And we’re off. Here’s the link to News Corp.’s earnings release, so you can play along at home.

4:35 pm: On the call: COO Chase Carey and CFO Dave DeVoe. No Rupert Murdoch, which is odd since he appeared happy to answer questions this morning during the Daily unveiling.

4:36 pm: Carey on that digital charge. Also included in that number, if I understood him correctly: Losses from sale of Jamba, FAN digital display network.

4:39 pm: Now time for some context: Cable is doing nicely, as it always does for News Corp. Ad sales up 17 percent, affiliate fees up 11 percent. And that includes the one-month blackout we had with EchoStar, which cost us about $30. million.

4:39 pm: Film: We’re down, but part of that is because we had a great quarter a year ago, comparatively. But “Black Swan” is great!

4:40 pm: TV: Up, due in part because of political ads. NFL ratings and prices are up, which is good because the World Series wasn’t as good as it could have been.

4:41 pm: [If you're interested in News Corp.'s satellite business, I'll direct you to the earnings report. Back shortly.]

4:42 pm: Publishing: Down from last year. Advertising is up across the board, but Harper Collins is down, and we invested in the Daily [so that $30 million charge is *not* included in the $275 million?]

4:43 pm: “Other”: Pretty much Myspace at this point, which is a mess. A loss of $156 million, which is $31 million worse than last year. Myspace results are “worse than our expectations.”

[Apologies, that was DeVoe.THIS is Carey:]

4:44 pm: Ad markets up at all our cable businesses, but we’re not dependent on that, because we have this great revenue stream from subscriber fees.

Fox News beat all other news networks combined. It’s the No. 4 channel in basic cable. All our affiliate deals are coming up, and we’re going to get a lot more from the cable and satellite guys for the rights to that channel.

4:47 pm: Ad market strong for broadcast, too. “Absolutely thrilled” with “American Idol”‘s performance. Fox Sports doing great, too. NFL was best ever, and Super Bowl will be great. NASCAR may be down a bit, though.

And don’t forget that we’re now starting to get paid by cable guys for our Fox broadcast, too, which they used to get for free. “We’ll be taking this business to a whole new level of profitability.” Will generate $1 billion annual operating income in a couple of years.

4:50 pm: [Satellite talk, which makes me drowsy yet again.]

4:51 pm: TV studios doing great. Making a pile from “Modern Family” reruns. “Glee” a money maker, too.

Film studios not as strong this year, but that’s the nature of the business.

And don’t forget “Avatar” 2 and 3!

4:52 pm: On the Daily: Rupert is still giving briefings on this as we speak–exactly the kind of thing we should be doing.

On Myspace: Completed “rebuild” of business, and “right-sized it.” And “now is the right time for News Corp. to consider strategic options for the business…and we’re “evaluating strategic alternatives.”

Time for Q&A: First question was about retrans fees, which I missed. But retrans worth “hundreds of millions of dollars.” Carey says.

Q: Color on ad market, please.

Carey: “It’s really good, solid growth” across all platforms. Print not as much as TV, but everything’s strong.

Q: What do you think of TV Everywhere?

Carey: “I prefer to call it “authentication.” But “it’s a good thing…it’s struggled to get going” because cable systems have been resistant. But “at the end of the day, success has got to be built on making it a good experience for consumers or they’ll find another way….At the end of the day, consumers are going to migrate” to good experiences. “It hasn’t gotten very far.”

Q: More on authentication, please.

Carey: I don’t think that the right way to do this is to say, “You can watch something on cablecompany.com or Fox.com”–you should be able to watch it when you want, where you want.

[A lot of "you know"s in Carey's last answer.]

Q: Please talk about how you will monetize Fox content. Disney just did a Netflix deal, and most of that value comes from ABC content. What do you think about doing something similar, and making old shows available online, and do you think “Modern Family”‘s value has decreased because of online exposure, as Turner said?

A: Two different values–delayed access to current content, and library content, which is what Netflix is doing. Netflix is competing for library rights, generally. We’re a buyer–at FX–and as buyer, I wouldn’t want to pay a lot of money for syndicated TV and have it also show up at 20 million homes at Netflix. In general, TV businesses have been selling their product too cheaply. “We need to make sure we’re getting fair value for our product, no matter what the distribution channel is.”

5:06 pm: Q: What about moving up windows, etc. for video on demand?

Carey: Creating an early window “is very important for us.” Getting that window properly priced is important, and I think you’ll see people moving forward with it in the first half of this year.

[Sorry missed a question, and next one is about satellites. Even Carey is yawning as he answers.]

Q: What are your expectations for Myspace losses for the year “or earnings”?

“Focus is on strategic options” [as in, who cares? We're selling this dog. Do you have a dollar?]

Q: How does Hulu fit into your vision about monetizing content at Fox, etc.? Also, what’s up with TV syndication dollars? Still strong? If so, why?

A: “Hulu…they’ve done a great job.” Glad they’d doing subscriptions. And “I think the digital marketplace is going to continue to evolve…not going to speak for their strategy” etc. [i.e., non-answer].”

Meanwhile, “TV continues to prove itself…as second to none” in terms of value to consumers, advertisers.

Q: What are economics of the Daily? When will you break even, and what does it mean for newspaper strategy in general?

Carey: “The Daily is not a newspaper. It’s a news product” so don’t think about it as part of our newspaper business, or part of our television business.

By the way, we should do that with all brands and content. Not ruling out the Web, but for us, the digital play is figuring out how to leverage “the content brands that we have.” And digital is great because “for a pretty modest investment” you can create great stuff.

Five hours into our launch, I won’t talk about breaking even.

DeVoe: Like we said, we spent $30 million so far, and another $500 thousand a week going forward.

Q: Your prices and subscriptions for digital are based on household, not per connected device – ie, charge familes more, single people less. Wouldn’t that cut down on piracy, too?

Carey: DirectTV does charge per box, actually, and I think cable guys are doing that too, based on number of TVs. But “I’m not sure there’s a lot of upside” in that for cable networks, etc.

[Apologies, have to duck out of this for a few minutes]

[Back now, thanks]

5:30 pm: Sigh. Another Sky question!

5:31 pm: Color on timing of Myspace decision, and premium VOD launch?

Carey: Actively engaged in Myspace discussions now.

Finished. Apologies for multitasking during this one. Need an extra pair of hands, eyes, ears and another mouth today.

The milestone means “Call of Duty: Black Ops” crossed the $1 billion threshold nearly a month earlier than the last version of the game, “Call of Duty: Modern Warfare 2, “which came out in early November 2009. In a news release, Activision CEO Bobby Kotick said only “Call of Duty” and the movie “Avatar” have passed $1 billion in revenue so quickly.

In an interview, Kotick attributed the improved performance of “Black Ops” to the quality of the game, including the manner in which it allows even novice gamers to easily start playing the combat game.

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Hollywood director James Cameron–whose “Avatar” began the explosion of 3-D in movies–has been complaining about too many substandard movies being made using the technology.

But this film, “Gulliver’s Travels,” starring Jack Black, looks like it will be terrific in 3-D and is chock-full of special effects too.

It’s coming out for Christmas.

Here’s the video of the latest trailer:

But the troubled Web property is a…really troubled Web property, its News Corp. parent stressed today. And it needs to get its act together before it gets kicked off campus.

That’s the message that COO Chase Carey took pains to get across during his company’s earnings call this afternoon.

Revenue at Myspace was down $70 million compared to the same quarter a year ago, the company said, and “traffic numbers are still not going in the right direction, Carey said. Which means that its “current losses are not acceptable or sustainable.”

Okay. But Myspace has been in decline for some time, and Jon Miller and Mike Jones have been trying to fix it for more than a year. And last year at this time, we heard a similar assessment, only then Carey kept calling the site a “work in progress.” So how much more time do they have?

Carey: “We judge in quarters, not in years.”

My understanding is that when Miller took the job as News Corp.’s chief digital officer in the spring of 2009, he believed he had a real shot at fixing the social network, which had already cooled from red-hot to not at all.

But sources in and out of News Corp. tell me that Miller and his team are now merely hoping to patch the service long enough to find a buyer. Perhaps no one has told Carey, who seems to be conducting an anti-sales pitch.

——————-

EARLIER:

First look at Rupert Murdoch’s latest report card: News Corp. ended the September quarter with revenue of $7.4 billion and earnings of $0.27 a share (after factoring out a one-time tax gain). That’s almost exactly what the Street was looking for–expectations were $7.4 billion and $0.24 per share.

A quick run-through by unit:

• Cable: Up, because ad dollars are up and so are those affiliate fees that cable providers don’t want to pay but do.
• Movies: Down, because last year the company had an “Ice Age” movie in its results, and this year it’s fairly hit-less. It is making money selling reruns of “How I Met Your Mother,” though.
• Broadcast TV: Up, because local TV stations are doing better than last year, when they were still crippled by the recession.
• Satellite: Down, because costs were up.
• Publishing: Up, because newspapers are doing better than last year, when they were terrible. Ad revenue is up 13 percent worldwide. (This is where I note that News Corp. owns Dow Jones, which owns this site.)
• Random other stuff: Down, in large part because of Myspace and the rest of News Corp.’s digital unit, which is still trying to turn around.

I’ll come back to liveblog the conference call at 4:30 eastern, in the hopes that Murdoch says something interesting about politics, pay walls, the economy, Myspace, Apple and/or Google. He usually does!

LIVEBLOG:

BIG bummer: No Rupert on call today–because he’s traveling. (Some place with no phones? What’s up with that?)

CFO Dave DeVoe running through segment performance.

Cable: Some boasting about Fox News, FX, Big 10 Network, etc.

Movies: Nothing new here.

TV: TV stations up, but broadcast network losses up big “from higher cancellation costs.”

Satellite: [Apologies, had to duck out for a second.]

Newspapers: Again, ads up in all big newspapers.

Other/Digital: $70 million lower search and ad revenue at Myspace y/y.

Guidance: Leaving unchanged (though DeVoe notes that Myspace is still under plan).

COO Chase Carey:

Lots of focus on our retrans deals, and they are “critical” to our future. “We will be taking this business to a whole new level of profitability.”

Lots of growth ahead in International pay TV market.

Walk through of “key initiatives” throughout the company.

[Still sulking over Rupert-less call.]

Fox Film hasn’t had breakout hits, but no stinkers “in an industry known for them.”

We’ve got Jim Cameron locked up for Avatar 2 and 3, you know. And Modern Family is going to make us a pile of money in syndication.

Wish the World Series wasn’t such a bummer, and a short one. But NFL on Fox doing great.

WSJ still growing. Building digital business that “will take time to emerge.” “We feel very good” about subscription business in U.K.

“We’ve been clear that Myspace has been a problem.”

But relaunching “and we feel really good about” it. “Current losses are not acceptable or sustainable” and current management knows it, even though it’s not their fault.

But we know that we have to work very hard in coming months to get this thing sustainable.

[This is some of the most negative commentary I've heard yet from News Corp. on Myspace. Hard to sell an asset when you're describing it this way.]

Q&A:

Myspace: How much time do you give the relaunch to figure out if it’s successful. And what if it’s not?

Carey: We judge in quarters, not in years. Goal is to get to a place where top-line revenue is going in the right direction and “a clear path to profitability.”

We feel good about the relaunch. But “our traffic numbers are still not going in the right direction” and we have to stabilize that.

Fox TV content on digital platforms: It’s available on Hulu and Fox.com. How is that strategy going, and will you continue to be open?

Carey: Broadly: “This digital arena is still evolving.” We’re very focused on managing rights. Key issues: Windows, ad load, pricing. [Not answering at all, really.] “We think the digital arena is a very important one” particularly mobile, iPad, but “look, scarcity of our product is a real value.” But we’re learning as we go. “I do think it’s important that the digital platforms continue to develop dual revenue stream options.” That’s critical, and options are just beginning to evolve.

More on Myspace: There are a lot of operations in “other” besides Myspace: Mobile, Fox Audience Network, etc. What else could improve there?

Carey: Only two other businesses in there: Mobile, and outdoor networks, (and IGN). Not a lot of room for growth in those businesses.

So it’s really about Myspace?

Yes.

Avatar: What’s upside here?

Carey: Sequel to the most successful film ever? It should be pretty good! “Enormous events, without comparison or rival.”

[Please bring Rupert back!]

Please talk about terms of new Cameron deal?

Nope.

On retrans: Cablevision said they got better terms by holding out for a couple weeks. How do you react to that? If true, will we see more of these holdouts?

[Also a question about BSkyB I'm not that interested in.]

Carey: Mostly I saw Cablevision complaining that the government didn’t bail them out. But we feel pretty good about where we are. We didn’t think the government needed to get into it, and it would have been nice if the government would have been clear up front “it may not have gone off the air at all,” but whatever–”this was a matter to be dealt with between private parties.” [Ignore all those press releases we sent out!]

Can you talk about advertising trends and expectations?

DeVoe [I think]: They haven’t changed.

Cable margins: How long can you keep growing them?

Carey: We have room to drive a number of our channels, via more distribution, jacking up fees, advertising, etc.

What about getting more money from regional sports networks?

Carey: Won’t get into specifics.

[We want Rupe! We want Rupe!]

International channels seem to be doing well. Where is that growth coming from?

Carey: Part of it is the weak U.S. dollar. But overall, growth is “big and broad.”

Oh man. Even Chase Carey is yawning as he answers the question.

[Skipping accounting question.]

Back to network TV: Please talk about sports programming costs, etc. NFL, baseball, NASCAR. You spend a lot. Does retrans help support those costs? Or will you move some of that to cable?

Carey: I don’t think it makes sense to differentiate broadcast and cable much anymore. That’s the point of retrans–to make broadcast look like cable, with dual revenue stream.

On sports: It’s expensive, and draws big crowds. “It’s a unique strength in a world of DVRS” but “they come with big price tags.” We’d like to continue running it, but we have to do it at the right price.

Retrans does help, though–networks that are only ad-supported won’t be able to pay for these rights over time. Still, gotta be disciplined, etc.

Back to digital: What’s going on with Google TV? Are you thinking about different devices and different screens as a way to window, instead of calendar? I.e.: Make it available on PC but not on the big screen, etc.

Carey: I think within the house, the difference between screens won’t matter. I do think mobile is a discrete platform. [And some general chatter about tablets.]

But generally, “our content is incredibly valuable” and “we’re not going to throw it out there for everybody” unless we get compensated for it.

[Boring question about syndicated TV. Carey flipping through papers]

Hey, what about M&A deals, like Yahoo?

“Things like Yahoo are because the press needs things to write about.” [Zing! Also, hey, Jon Miller!] “We don’t need to make any acquisitions. But if there’s something out there, we should consider it, but we’ll do it in a very disciplined way” like we have in the past. Generally, we’d rather build than buy. “But if we see something we can acquire at a very attractive price that fits, we’ll take a look at it.” We’re not shopping.

[Skipping another cable channel question.]

Time for press Q&A:

How do you make broadcast look more like cable?

Carey: Retrans fees, like we’ve been talking about for the past couple years.

What about doing “premium video” (windowing movie release on TV?).

Carey: Looking at it.

What about further delaying movies to Netflix, Redbox beyond 28-day window (Warner talked about this today)?

Carey: We’re okay right now, but we’re looking at it. But as VOD grows, windows will change and evolve. But right now “we feel what windowing we’ve done has been good for us.”

Color on Apple TV 99-cent rental, please:

Carey: It’s pretty new. Only relevant for the past month or so. Too early to judge.

What’s your vision for European and British markets after you buy Sky? Will you buy Endemol?

Carey: Don’t really want to talk about it, too early.

Please talk about Times of London pay wall performance to date. Also, what are you thinking about your iPad newspaper in the U.S.?

Carey: Re U.K.: “We feel very good about it. Realistically, it’s very early….This is not something that’s a one or two quarter game.”

Same thing with the “whole digital arena” evolving, etc.

Hah. Refuses to talk about iPad newspaper. Which is not a newspaper!

Call finished, mercifully.

With a couple of downloads and the camera application on a smart phone, users of Tonchidot’s software can view information on their phone screen about their physical location, drawn from geo-tagged content submitted by users. They can also battle virtual monsters or defuse virtual bombs in real-world environments. Tonchidot’s technology combines the “check-in” elements of companies like Foursquare Inc. with social games similar to those of Zynga Game Network Inc.

Honda says his favorite Tonchidot game is called Sekai Hero, in which he checks in to a location to collect points with his pink-haired monk avatar. He can also fight monsters that might be lurking in the location’s augmented reality space. “I play quite a bit,” he said. “My wife is actually fed up with me.”

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MR. MOSSBERG: Have you ever watched a movie on an iPhone or an iPad?

MR. CAMERON: The iPad I would do. The iPhone is just too small for me. Now, I think other media, whether it is news, sports or whatever it is, that is fine. But I would not watch a movie that way. To me there still has got to be some shred of sanctity in the film-watching experience.

Okay, the iPhone is too small, from a sanctity perspective. But what about the Vibrant Galaxy S Series Smartphone from T-Mobile? That’s an excellent device for viewing “Avatar,” say Samsung and News Corp. (NWS), which owns both 20th Century Fox and, um, this Web site. They’re including a copy of the movie with each new phone, preloaded on a two-gig external memory card.

To be fair, the Vibrant, which runs Google’s (GOOG) Android operating system, features a four-inch screen. And Apple’s (AAPL) handset has a mere 3.5 inches. So perhaps that’s enough to change Cameron’s mind.