Now there’s some additional information on timing, thanks to a lawsuit between Activision and some former employees.

According to confidential agreements unsealed in the court case, Microsoft’s next game console, which is referred to as the “Xbox 720,” could be released in time for the 2013 holiday season.

The Los Angeles Times originally posted the documents on Monday, but it was Brier Dudley of the Seattle Times who came up with the theory on the timing.

The lawsuit is a complicated tale, involving Activision’s insanely successful first-person shooter Call of Duty. Former Activision developers are claiming they are owed hundreds of millions of dollars in royalties and bonus payments. Activision is claiming breach of contract.

The documents, revealed last week, detail a high-profile deal between Bungie and Activision in 2010.

The 27-page agreement calls for Bungie to develop four “sci-fantasy, action shooter games,” code-named “Destiny,” released every other year, beginning in the fall of 2013, according to the Los Angeles Times. Additionally, Bungie agreed to put out four downloadable expansion packs code-named “Comet.”

Bungie is the developer behind the successful Halo franchise, but is not the developer behind Halo 4, which Microsoft is developing and releasing in November.

Here’s what Dudley is suggesting based on the contract language:

Microsoft hasn’t said when the next version of the Xbox will go on sale, but the Bungie contract suggests that it could happen in the 2013 holiday season, with “Destiny” as a key launch title. That would be similar to the way Halo was a cornerstone of the first Xbox launch in November 2001.

An Xbox spokesman declined to comment on this theory, and referred questions to Activision and Bungie.

The document also says the game is expected to be released for the PlayStation 3 successor in the fall of 2014.

The big caveat to all of this guesswork is that the document is now two years old, so timing could easily change. Additionally, the name “Xbox 720″ could just be a code name or placeholder. Of course, console makers keep the timing of their upcoming hardware close to their vests, so that consumers don’t hold off on making purchases.

In March, Microsoft’s Corporate Communications boss Frank Shaw told AllThingsD that consumers probably shouldn’t expect new hardware at the E3 game conference, or “anytime soon.”

“For us, 2012 is all about Xbox 360,” he added.

The Redmond, Wash.-based company said today that for the first time, Xbox Live users are now watching more movies and TV and listening to music than gamers are using it to play online games.

The recent shift is worth noting given the mind-boggling number of hours gamers are willing to spend online destroying opponents on the battlefield or football field.

Microsoft declined to break down the number of hours spent, but as an example, 3.3 million players logged seven million hours on Xbox Live on the first day alone that Activision’s Call of Duty was available back in November.

What’s more, the growth of entertainment is not at the expense of gaming. Online gaming on the Xbox is up over the past year, too. In fact, Xbox Live usage — spanning gaming and entertainment — is up 30 percent year-over-year.

The shift toward entertainment is not completely unexpected, since Microsoft has been investing heavily in turning the console into a more general entertainment device for the living room. Sony’s PlayStation has a similar emphasis and Nintendo’s upcoming console, the Wii U, is expected to support entertainment applications.

In December, Microsoft rolled out a massive software update to the Xbox that allowed users to control the console using the Kinect. As part of the update, it also began to add more than 40 content providers to the console to increase the catalog of live and streamed TV, movies and music.

As previously announced, Xbox today launched voice-controlled TV apps from Comcast and HBO Go in the U.S., and MLB.TV throughout North America. To access these apps, you must be a subscriber, meaning it is not meant as a cable subscription substitute.

Despite some industry gains from January to February, overall sales totaled $1.06 million last month, down from $1.33 billion year over year; software sales fell 23 percent to $464 million, and hardware sales dropped 18 percent to $381.4 million.

February’s best-selling software title was Call of Duty: Modern Warfare 3, from Activision Blizzard.

While most hardware platforms posted declines year over year, “all current-generation platforms improved sales over January 2012 by more than 50 percent,” NPD said in a note.

A consistent bright spot has been the Microsoft Xbox, which was the best-selling hardware platform for the seventh month in a row. Some 426,000 Xbox units were sold in February, marking the 12th consecutive month Xbox has held more than 40 percent of the current-generation console market share.

And all eyes were on the Sony PlayStation Vita handheld gaming device, which came to market in late February. Only four days of retail sales for the PS Vita were included in this reporting period, but the device gave overall hardware unit sales a month-over-month boost. Not including the PS Vita, hardware unit sales increased by 62 percent over January, NPD said; with PS Vita sales included, the increase was 87 percent.

“More than 1.2 million PS Vita units have been sold globally since launch,” Patrick Seybold, senior director of communications at Sony Computer Entertainment America, said in a statement. “Customer satisfaction rates are very high and momentum will continue as gamers get their hands on a deep lineup of blockbuster titles that take advantage of PS Vita’s unique features, including cross-platform play with the PlayStation 3.”

In January, the videogame industry saw a double-digit decline in physical software sales, as my colleague Tricia Duryee reports, following a number of noteworthy game launches ahead of the holiday season.

But he said Skylanders: Spyro’s Adventure, which attempts to bring physical toys to life through videogames, has been worth it.

“It was scary,” he said. “But if you truly have a breakthrough idea, then you have to have the confidence to treat it as one because they don’t come around very often.”

To be sure, the game was a major deviation from the company’s war-based roots.

It melds physical toys with videogames by using a “portal,” which is plugged into the game console. Once a Skylanders toy is placed on the portal, the character transports into the game and comes to life on the screen.

In 2011, the game was the tenth-best seller after launching in October, and was the only title to make the list that wasn’t a sequel. Additionally, it was the only kids game.

Hirshberg appeared this morning as the keynote speaker at DICE, an annual videogame summit held in Las Vegas.

His speech, titled “The Eric Hirshberg Experiment,” addressed how he has a nontraditional background as a CEO, but that Activision Blizzard’s CEO Bobby Kotick saw the usefulness of his creative background. Rather than being a trained operations or finance manager, Hirshberg is a marketing type who is more likely found drawing and bringing a sketch pad to meetings.

“There are other creative CEOs, but they generally founded the companies, like Bill Gates or Steve Jobs,” he said. “But if creativity is at the core of your business, maybe it should be at the core of how they make decisions.”

Skylanders is just one case in point.

To make it the best experience possible, Hirshberg said they delayed the game’s launch by a year and spent the time getting the toys right, so they could compete side by side with characters developed by Pixar or Disney.

They also spent time making sure the game could work across platforms, so kids could play it at any of their friends’ houses regardless if they had a PC, Xbox, Sony PlayStation or Nintendo Wii.

As a result, every decision resulted in taking on more risk and spending more money.

Last night, Skylanders was voted as the most outstanding innovation in gaming as part of the 15th Annual Interactive Achievement Awards, which are decided on by members of the Academy of Interactive Arts & Sciences.

“We knew a lot of things had to go right — the core to that was bringing the toys to life. We knew that was magical, and if we got it right, it would have huge potential,” Hirshberg said. “We had the whole package. We had a great game and a great story and then pushed with all of our might with a big marketing plan.”

Yesterday, Activision reported fourth-quarter results, reporting well above its internal guidance and Wall Street analyst expectations, driven by extremely strong sales of Call of Duty, but also strong sales of Skylanders as well as, plus stable subscriber figures of its online game, World of Warcraft.

Additionally, the NPD Group said yesterday that the Skylanders toys were a top-selling accessory in January. It said that the toys were the highest-ranking item last month, and that collectively, Skylanders accessories represented 22 percent of all accessory sales.

For sure, Hirshberg has early successes to point to, but the experiment is ongoing.

According to NPD data released today, about $6.7 billion, or 40 percent of consumer retail spending, was spent on the Xbox, breaking down into two categories: $2.1 billion on consoles and $4.6 billion on games.

The figures take into account U.S. retail sales of new physical videogame content, including portable and console hardware, games and accessories.

In all, those sectors generated revenue of $17.02 billion in 2011, an 8 percent decline over the $18.6 billion generated last year. (Yes, I repeat, Microsoft got 40 percent of that in 2011.)

The initial report does not take into account sales from digital formats such as downloadable content on the console, social and mobile games, or other categories, including used and rentals.

Those so-called “newer” categories generated $7.24 billion in revenues last year, an increase of 7 percent over the prior year.

The increase in spending on alternative formats, however, wasn’t enough to offset declines in physical retail. All told, consumer spending across both categories totaled between $16.3 billion and $16.6 billion, falling 2 percent over last year.

Separating physical and digital sales is quickly becoming an outdated concept, since the two are so intertwined. Consumers have the choice of purchasing many of the games over the Internet via a digital download versus buying them at Wal-Mart or Target.

NPD acknowledged today that it needs “deeper visibility” into digital distribution to get a complete picture of the industry, which will be its focus in 2012.

Still, the report can still be used as a litmus test to see what is performing well.

Overall, a surprisingly disappointing December is what dragged down results for the whole year, NPD discovered.

“Because of the great slate of content that came to market during the fourth quarter, I had expected December sales to represent a larger portion of total year sales than what occurred,” said NPD Group analyst Anita Frazier, in a release.

Frazier added that December sales accounted for just 23 percent of the annual total, compared to the past 10 years, when December, on average, represented 28 percent of the total.

In addition to Microsoft’s Xbox, Sony’s PlayStation also performed well, with both witnessing a 5 percent increase across all game categories for 2011. Meanwhile, the Nintendo Wii, which cannot display HD content, saw a decline year over year.

In a separate statement, Microsoft said that it outsold the PlayStation, the second-place console, by 2.7 million units, and that in all, it has now sold 66 million Xboxes and 18 million Kinect accessories. On a global basis, Sony said in a statement that it sold more than 6.5 million units worldwide this holiday season.

Here are the Top 10 best-selling games in December, according to NPD:

1. Call of Duty: Modern Warfare 3 by Activision Blizzard
2. Just Dance 3 by Ubisoft
3. Elder Scrolls V: Skyrim by Bethesda Softworks
4. Mario Kart 7 for 3DS by Nintendo
5. Battlefield 3 by Electronic Arts
6. Madden NFL by Electronic Arts
7. Assassin’s Creed: Revelations by Ubisoft
8. NBA 2k12 by Take Two Interactive
9. Super Mario 3D Land for 3DS by Nintendo
10. Batman: Arkham City by Warner Bros. Interactive

But it also warned that Tom Clancy’s Ghost Recon Future Soldier, one of the Paris-based company’s big franchise hits, would be delayed by three months, or until its fiscal first quarter of 2012-13.

The game is expected to launch in North America on May 22, and in Europe on May 24, for the Xbox 360 and the PlayStation 3.

Ubisoft said it was expecting third-quarter sales of 650 million euros ($828 million), up 8 percent over the same period a year earlier. That exceeds its previous guidance of 620 million euros ($790 million), which was at the high end of its range.

Two of the games that Ubisoft said performed well during the holidays were Just Dance and Assassin’s Creed: Revelations. The latter faced steep competition from both Activision’s Call of Duty and Electronic Arts’ Battlefield 3. Ubisoft also said it continues to see growth from online sales, which would include social games.

“In continuation of the robust trends recorded for the first half of the fiscal year, Ubisoft reported record-high sales for the Christmas period, exceeding expectations,” said CEO Yves Guillemot, in a release.

Due to its strong third-quarter performance, Ubisoft said it was revising its full-year guidance to 1.08 billion euros ($1.4 billion) on the high end. Operating income before some expenses is estimated to be up to 65 million euros ($82 million), up from the previous estimate of up to 60 million euros ($76.5 million).

Final third-quarter results will be published on Feb. 15.

Wedbush Securities analyst Michael Pachter maintained his neutral rating on the stock, and his 7 euro price target, based on the unclear release schedule and recurring delays.

Ubisoft, which trades on the Paris stock exchange, is currently trading at 5.23 euro.

That designation comes from Web video tracker Visible Measures, which says the official upload from Apple, plus unofficial uploads and derivative clips (parodies, “responses,” etc.), generated 28 million views this year.

Runners-up for the “most viral” title, according to Visible Measures: Ads featuring Lady Gaga, the International Space Station, PlayStation 3 and YouTube gaming god Freddie W. (One of these things …)

It’s worth noting that Visible Measures’ methodology and classifications for this one are a bit particular. For instance, it includes ads for videogame platforms, but not the games themselves. There’s some logic to that, because while videogames have many, many more views, the bulk of them come from “game play” videos that players upload themselves.

Which is fine, but that also means that straight-up ads like Jonah Hill’s Call of Duty spot don’t make the list. And that one has racked up  a minimum of 17.7 million views this fall.

But at the very least we can say that these are five very, very popular Web videos from the past year.

Google Chrome’s “The Web is What You Make of It” Campaign: 22 million views

YouTube/Spacelab: 17 million views

Sony PS3 “Michael/Long Live Play” ad: 15.8 million views

YouTube star Freddie W’s Samsung “Gamer Commute” ad: 11.5 million views

The game, which was released today, is expected to be the videogame publisher’s top-selling title this year, even though it faces steep competition from Electronic Arts’ Battlefield 3 title.

The company also said today that other franchises, including a brand new game called Skylanders, enjoyed unexpectedly high adoption from users.

“Based on our third-quarter performance, stronger than expected consumer response to our new entertainment property, Skylanders: Spyro’s Adventures, and Call of Duty: Modern Warfare 3, we are raising our full-year financial outlook and expect once again to deliver record operating margins and the highest earnings per share in our company’s history,” said Activision’s CEO Robert Kotick, in a release.

Skylanders uses small miniature toys that come to life in the videogame across multiple platforms.

In the third quarter, the company reported Q3 revenues of $754 million, up from $745 million, and a profit of $148 million, or 13 cents a share, up from $51 million, or 4 cents a share in the year-ago period. On an adjusted basis, the company recorded a profit of 7 cents a share.

Results easily beat analyst expectations, who were expecting, on average, adjusted earnings of two cents a share on revenue of $564.8 million, according to a poll by FactSet.

The company was previously expecting revenues of $4.18 billion, or 68 cents a share. It has now upped those estimates to $4.33 billion, or 76 cents a share.

During regular trading today, shares of Activision Blizzard at one point rose nearly 3 percent to $14.11, which put the stock to a new three-year high. The stock ended up closing up 1.38 percent, but in after-hours trading the stock continued to jump, increasing more than 4 percent to $14.55.

On sale Oct. 16, the game, called Skylanders: Spyro’s Adventure, represents a major deviation from the company’s hugely successful war-based Call of Duty.

The game melds physical toys with videogames by using a “portal,” which is plugged into the console. Once an official Skylanders toy is placed on the portal, the character transports into the game and comes to life on the screen.

The game is similar to one announced recently by Disney that uses miniature toy cars and an iPad. In this case, kids place the physical toy on the iPad’s screen to interact with the game, which is based on the movie “Cars 2.”

Eric Hirshberg, CEO of Activision Publishing, told me in a phone interview that Skylanders has “got a couple real innovative stories to tell.”

Not only does the game enable physical toys to come to life inside of a virtual world, Hirshberg said, it also can be played cross-platform. “The toys travel from console to console and to the Web, and they remember everything that happens to them,” he said.

That means a child’s chosen character will remember what level it has attained and transfer that information from the player’s Nintendo Wii to an Xbox or Sony PlayStation at a friend’s house. Players will also be able to pick up where they left off on Android, iOS, Nintendo’s 3DS and online.

“If you play on your Wii and level up to 10 and then go to the Xbox, those all go with you,” Hirshberg said. “And then, on a road trip, you can log in to the iPhone version and the same thing happens.”

Skylanders: Spyro’s Adventure will have more than 30 different characters.

The plot is about a mysterious world that has been taken over by a sinister Portal Master known as Kaos, who has frozen the Skylanders as toys and banished them to Earth. The players are charged with helping to return these heroes back to their world.

In a release yesterday, Activision said the games would be on display in Toys“R”Us as soon as this weekend, to get the buzz started ahead of the holidays.

Toys“R”Us Chairman and CEO Jerry Storch said, “We believe that the product line will be one of this holiday’s hottest gifts, and we can’t wait to offer customers a one-of-a-kind way to discover Skylanders at our stores.”

A $70 starter pack includes a copy of the game (on PlayStation 3, Xbox or Nintendo Wii), three Skylanders characters, the portal of power, a character poster, trading cards, stickers, Web codes and batteries.

During the quarter, revenues from digital channels increased 27 percent year over year and accounted for 37 percent of the company’s total net revenues.

Strong digital revenues also contributed to record profits.

Activision reported record earnings per share of 29 cents as compared with 17 cents in the second quarter 2010. Revenues were also up, totaling a new record of $1.1 billion compared to $967 million in the year-ago period.

In a release, Robert Kotick, Activision’s CEO said, “Today, there are more ways than ever for players to access entertainment online and play games which have truly become one of the most compelling forms of entertainment in the world.”

A majority of the company’s digital revenues come from subscriptions, downloadable content and full-digital downloads.

On a non-GAAP basis, the company reported diluted earnings per share of 10 cents on revenues of $699 million. This exceeded the analyst consensus of 5 cents a share on revenues of $599 million.

Activision is also raising its outlook for revenue and earnings per share for calendar year 2011.

It is now expecting non-GAAP revenues of $4.05 billion and 77 cents a share for the year, up from previous expectations of non-GAAP revenues of $3.95 billion and 73 cents a share.

The company’s stock is trading up in after-hours duty by about 3.64 percent or 43 cents to $12.25 a share.

Put on a pair of 3-D glasses, listen to the bombs exploding in the distance, or stand in line for hours to get a glimpse of Call of Duty Modern Warfare 3.

Traditionally, the event has been all about videogame makers outdoing one another to ensure shelf space at the major retailers, like Target, Wal-Mart and GameStop. But increasingly the conversation is also about something that takes up absolutely no space at all: digital games.

Maybe to the surprise of many of the 45,000 people in attendance this week at E3, it’s the intangible stuff that’s driving much of the industry’s future.

The Entertainment Software Association, which organized the 17th annual event, released results of a study saying that the format and demographic make-up of gaming are changing.

It said that purchases of digital full games, digital add-on content, mobile apps, subscriptions and social network gaming accounted for 24 percent of game sales in 2010, generating $5.9 billion in revenue.

Other findings:

• The average game player is 37 years old, while the average game purchaser is 41 years old;
• Sixty-five percent of gamers play games with other gamers in person;
• Fifty-five percent of gamers play games on their phones or handheld devices;
• Consumers spent $25.1 billion on game content, hardware and accessories in 2010.
• Forty-two percent of gamers are women, and women 18 or older make up more than one-third of gamers.

More From E3

• At E3, Xbox Lets Kinect Lead the Charge on Gaming, Live TV Ambitions
• Justin.tv Broadcasts Gamers’ Every Move on TwitchTV
• Who Needs War? Sparks Will Fly in EA’s New Sims Game for Facebook.
• Sony Unveils Vita Gaming Device at E3; Will Launch This Year for $249
• E3: Nintendo Unveils the Wii U With Tablet-Style Controller
• Three Key Takeaways From Nintendo’s Wii U (Plus Photos!)
• No Hacks to Report at Xbox, But Microsoft Isn’t Letting Its Guard Down
• Forget About 99 Cents, What If You Could Rent Mobile Games for 25 Cents?
• Digital Game Revenues Hit $5.9 Billion in 2010

One of the most anticipated launches of the year is EA’s Battlefield 3, which is expected to go head to head with the seemingly unstoppable Call of Duty franchise.

But at the company’s eardrum-splitting press conference in downtown Los Angeles, it also showed off The Sims, which is reflective of a wider trend in the industry to embrace other platforms.

In addition to Battlefield 3 and The Sims, EA screened the latest Mass Effect 3, the upcoming Need for Speed (including foot races for the first time!), and, of course, Star Wars, its highly anticipated massive online multi-player game.

For Xbox this morning, a wider audience meant announcing a ton of Kinect titles, and for EA this afternoon, it meant announcing the release of its very popular Sims franchise on Facebook.

Sims Social is building off a brand that’s played by 140 million fans in 22 languages in 60 countries around the world. To date, it has been available on the PC, PlayStation, Xbox, Wii and mobile. Now you can play with your friends on Facebook, too.

Players will be presented with challenges, such as forming romantic relationships, flirting, joking and getting married. In this case, they’ll have the chance to play with Facebook friends, causing all sorts of real-life sparks to fly. For example, players will have the chance at participating in a royal wedding, to build a dream home or take a shower with their lover. In addition, they will be able to play pranks or achieve goals, such as having 10 girls in the hot tub at the same time.

Who needs Battlefield 3 when you can begin World War 3 among your friends, right?

The game is expected to launch “soon” in five languages with a mobile companion app coming later. “It’s about playing with life and the unpredictability of life,” said Jeff Karp, Executive Vice President of the EA Play Label.

The game will be free to play and users will be given the option of paying for virtual goods, such as clothes for your avatar and items for your home.

More From E3

• At E3, Xbox Lets Kinect Lead the Charge on Gaming, Live TV Ambitions
• Justin.tv Broadcasts Gamers’ Every Move on TwitchTV
• Who Needs War? Sparks Will Fly in EA’s New Sims Game for Facebook.
• Sony Unveils Vita Gaming Device at E3; Will Launch This Year for $249
• E3: Nintendo Unveils the Wii U With Tablet-Style Controller
• Three Key Takeaways From Nintendo’s Wii U (Plus Photos!)
• No Hacks to Report at Xbox, But Microsoft Isn’t Letting Its Guard Down
• Forget About 99 Cents, What If You Could Rent Mobile Games for 25 Cents?
• Digital Game Revenues Hit $5.9 Billion in 2010

Activision Blizzard Inc. plans to launch an online service called Call of Duty Elite this fall that will work with the next major edition of the game, Call of Duty: Modern Warfare 3, and future installments of the hyper-realistic combat-simulation game. In a move industry executives describe as a first, Activision plans to charge a monthly subscription fee for the service, which will provide extra content that isn’t offered on game discs sold in stores, including downloadable map packs that give players new Call of Duty levels to play.

Read the rest of this post on the original site »

In its first-quarter results released today, the company, which is known for its Call of Duty and World of Warcraft games, said its revenues from digital channels increased 30 percent year over year in the first quarter.

What’s more, on a non-GAAP basis, digital channels accounted for more than 50 percent of net revenues, or roughly $378 million.

However, what’s becoming clear is that the definition of digital is a moving target for all parties involved, a trend that will likely continue as companies experiment with new business models and ways to deliver games to consumers.

Activision’s big source of digital during the quarter came from the $15 content pack for Call of Duty: Black Ops, which provides new areas for players to explore that were not included in the the original game sold at retail. It’s available on Xbox today and is expected to launch on Sony’s PlayStation Network and the PC in the second quarter.

That’s much different from Electronic Arts, which said last week that its digital revenues for its fiscal year ended March 31 totaled $833 million, exceeding its forecast of $750 million.

When EA talks about digital, it refers to mobile games and social games on platforms, such as Facebook. For the most part, it’s not referring to downloadable content available on consoles (although it has that, too).

The differing points of view also come down to business models.

Mobile games and social games are often free and either monetized through advertising or through virtual goods that are purchased in the game. Online games are often paid for via subscriptions and console games frequently require a $60 upfront payment with the option of paying for more downloaded content later.

Thomas Tippl, Activision’s COO and CFO, said while digital revenues grew at 30 percent, it was also able to maintain margins of up to 50 percent since most of its digital content was leveraging the company’s large online communities and popular franchises.

Call of Duty and it’s $15 content pack is one example:

During the earnings call, Activision said that Call of Duty: Black Ops has now officially become the best-selling title of all time in dollars across the Xbox 360, PlayStation 3 and the PC in the U.S. and Europe. Additionally, the popularity of that title was able to drive massive sales of the digital add-on pack. While only released a few days ago, it has the potential to do better than most console games at retail.

“The Call of Duty content pack shattered records with 1.4 million downloads in the first 24 hours,” Tippl said. “We no longer think about launch events, but long-term on-going relationships with players. The response from fans underscores this approach.”

The company also discussed other digital initiatives, of which some could arguably be considered social, although they are not on Facebook.

In the works is a next-generation massively mutli-player online game; a micro-transaction game for China; a digital platform surrounding the Call of Duty franchise; a new property from Bungie; and Skylander’s Spyro’s Adventure, a new children’s game coming out that will tie the Internet together with real-life $10 toys.

But not ever in the company’s earnings release, or during the call, did Activision place much emphasis on mobile games or social games.

Actually, Facebook was mentioned once. Activision said that since Call of Duty: Black Ops First Strike launched on Feb. 1, players have spent an average of 58 minutes a day playing online, which is more than the 55 minutes an average Facebook user spends a day on the social network.

So, maybe it can build its own communities?

Still, one could argue that mobile and social are key components to the digital gaming experience.

In addition to Electronic Arts’ many investments in the space, including the purchase of Playfish, a social games publisher, Disney also acquired Playdom. Both plan to use the publishers to bring some of their more recognizable content from other platforms to Facebook. Social games are also becoming a massive business for privately held companies, like Zynga.

An analyst during Activision’s earnings call this afternoon asked about how the company viewed the various emerging platforms across the videogames industry.

In response, Activision’s CEO Robert Kotick said: “You hit on the most interesting of the fundamentals that are redefining interactive entertainment. More people are playing games than ever before.

“Facebook has done a good job of introducing interactive entertainment to people who have never engaged in gaming of that kind…We’ve always taken the approach of platform agnosticism. We deliver services across devices with a display and a microprocessor. We have to prioritize the resources based on the opportunity. As we look out three to five years, we see there being a lot more displays with microprocessors that will be capable of playing games. We are so excited about the prospects of the future. If it has a microprocessor and a display, our content can be there.”

But despite the round’s petite figure, especially in today’s healthy venture market, make no mistake that the Los Angeles-based company has blockbuster-sized ambitions and a valuation to match.

The round was revealed in a regulatory document filed today, but from what we are hearing from people close to the situation, it will put the company’s valuation in the low hundreds of millions. A company spokesperson declined to comment.

The financing is from existing investors, Redpoint and MK Capital, and brings the company’s total to about $20 million, including a small line of credit. It will give the company the cash it needs to fuel additional growth without requiring the executive team to lose focus by kicking off a gigantic fundraising effort. From what we are hearing, the latest round is not a reflection of the company’s growth, but it will help it stay on track.

Its YouTube channel is quickly becoming the destination for hardcore game fans to watch videos. Trust us when we say the demographic is as far from those playing FarmVille as you can get. It’s often adrenaline-pumping action filled with violence and profanity. In other words, it’s the top shelf of entertainment for most males aged 18 to 34.

While the niche sounds small, it isn’t.

In 2010, Machinima’s YouTube channel attracted 2.3 billion page views. Last month alone, it attracted 575 million page views and 67 million unique visitors. It’s seeing between 15 and 20 percent growth every month. The funding will allow it to keep growing and to expand to other platforms.

The growth is not that hard to understand. In fact, it’s probably the same trend that propelled Activision Blizzard’s Call of Duty: Black Ops to hit $1 billion in sales after slightly more than one month–the equivalent of a blockbuster movie release.

According to the company’s Web site, the word “Machinima” is basically a mash-up of the words “machine” and “cinema,” which is used to describe the process of “creating real-time animation by manipulating a videogame’s engine and assets.”

The company is essentially building a destination for videogame fans to watch a ton of its own editorial content, but also allows players to upload their own videos. Often, the video is a recording of someone playing a video game and providing their own play-by-play soundtrack as they achieve some great accomplishment.

By creating content and attracting fans, Machinima can generate buzz for videogames long after their initial launch dates. Users who continue to play games may buy additional downloadable content, which leads to incremental revenues for the game maker. In essence, Machinima is an advertising network, and it has worked on projects with all of the major gaming companies and film studios.

In a recent example, Machinima teamed up with Warner Bros. Digital Distribution to produce an original online series to promote Mortal Kombat. The nine-episode series, which has the quality of a feature-length film, debuted on April 12. In the first five days, the first episode got more than 5.5 million views.

Here’s that video [for mature audiences only!]:

The company–whose roots are in e-commerce and not mobile–aspires to merchandise and sell apps better than Google does on its own platform.

And, potentially as well as Apple, which up until now has been the shining star in mobile.

Beginning tonight, the Appstore will be accessible online at amazon.com/appstore. Android owners will also be able to download a version of the store to their handset. The store will support hundreds of mobile operators and hardware manufacturers.

Amazon has been recruiting developers since at least January to convince them to get on board with the venture. Initially, users will have access to a catalog of 3,800 applications.

While selling apps is not a particular stretch for the company since it already dabbles in a lot of digital content, like music and e-books, working with mobile developers is not exactly a home run since their time and attention is fragmented among so many competing stores and platforms.

However, the company’s efforts seem to be paying off.

At launch, apps will be available from dozens of developers, spanning big names like Gameloft, Handmark and Glu Mobile. (It’s also worth noting that its efforts have also not gone unnoticed by Apple, which is suing Amazon, claiming trademark infringement and unfair competition over the name.

To start, the store will be nowhere near the long tail of applications found on Android Market or Apple iTunes, which respectively have catalogs of roughly 150,000 and 350,000 applications. But Amazon is trying to make a big splash in terms of quality. The store launches today with an Angry Birds exclusive to its new hit game based on the movie Rio.

“The developer response has been really strong,” said Aaron Rubenson, category leader for Amazon Mobile Services. “We’ll be launching with a broad range of paid and free and the customers will find lots of best selling titles from Doodle Jump to Call of Duty to Zagat and Tweetcaster. The list goes on and it’s just day one. We are adding more every single day.”

One problem that Amazon is trying to solve is discoverability.

While there’s a huge number of apps in the market, customers have a hard time finding the ones they want to buy. Conversely, developers have a hard time monetizing.

Amazon will be doing four things to help with that:

• Amazon will offer one free app a day to help with promotion.
• Amazon will offer a feature called Test Drive, which will allow a customer to try an app out before they buy. The technology is using Amazon’s cloud services. Users will be able open and use the app from within their computer browser. The simulation will last for about 30 minutes at which point they’ll have to buy it.
• Lastly, Amazon will drive recommendations based on a user’s purchase history. If they are someone who purchases cook books and high-end utensils, Amazon may recommend a recipe app.
• Amazon is also enabling one-click purchasing for anyone with a credit card on file.

The retailer is also doing a few uncharacteristic things, including being the one to set the price of the app.

For instance, if the developer recommends the app be sold at $1, and Amazon agrees, they’ll make 70 percent, or 70 cents on each download. If Amazon decides to make it free for a day, the developer will make 20 percent off their original recommendation of $1, or 20 cents. The developer will always make whichever is greater.

Rubenson said the response has been positive. “As we’ve gotten closer to launch and have talked more tactically about our merchandising capabilities and programs, they [developers] are getting very excited about the potential.”

Amazon is clearly banking on Android’s success since it is unlikely to ever sell iPhone applications on Apple’s closed system. With more than 300,000 phones based on the operating system being activated everyday, and many more tablets coming, the company sees it as a very large opportunity.

Rubenson said Amazon works closely with Google in a number of ways, especially as a major reseller of its devices. It also maintains a site called Android 101, which teaches customers about the OS. “In that regard we are engaged on multiple fronts,” he said. “But one of the strengths of the OS is the openness. We’ve taken that and focused on making the best possible store for customers.”

So far, Amazon will mostly rely on driving traffic to their store through their own referrals. However, increasingly they expect to partner with carriers or handset makers. Rubenson said its first third-party partnership will be with Cellular South, which will make the Appstore available to its customers through preloads and other methods.

He declined to discuss revenue splits or the financial relationship with partners.

In fact, the only sector that grew in January was accessories, which increased six percent to $235.1 million

Accessories have been strong in previous months as well, buoyed by new motion-controlled remotes, like Microsoft’s Kinect and Sony’s Move.

The accessories have breathed new life into the Xbox and PlayStation at a critical time when the consoles have already been on the market for a couple of years.

However, accessories weren’t enough to keep both hardware and software sectors afloat.

In January, U.S. sales of videogame software fell five percent to $576 million compared to the same period the previous year. Hardware sales fell eight percent to $324 million.

In a statement issued by Microsoft today, it released more NPD data, including that it sold 381,000 Xbox units in January, up 15 percent year-over-year. It says it is the only console that showed growth in the time frame.

Microsoft also said it continues to experience some Xbox shortages at retail because of sustained consumer demand for Kinect, but anticipates the problem to improve through February, and is working retail and manufacturing partners to expedite production and shipments.

The top-selling games for the period were Activision Blizzard’s Call of Duty: Black Ops, Ubisoft’s Just Dance 2, Electronic Arts’ Dead Space 2, Sony’s Little Big Planet 2, and Majesco’s Zumba Fitness. Making it into the top 10 was MTV’s Dance Central, which teaches people how to dance using the Xbox Kinect.

Photo Credit: Harmonix

Powering the Tianhe-1A are some three million processing cores from Nvidia, the Silicon Valley company that has sold hundreds of millions of graphics chips for videogames. That’s right—every time someone fires up a videogame like Call of Duty or World of Warcraft, the state of the art in technology advances. Hug a geek today.

What a switch. For centuries, the military has driven technology forward, fostering new waves of industrialization and corporate use. James Watt’s steam engine was perfected with the help of a cannon-boring tool. Computers were created during World War II to calculate artillery firing and to break codes. The military bought half of all semiconductors until the late 1960s. Even the first global-positioning systems (GPS) were funded by Congress, not for navigation but as a nuclear detonation detection system. Add microwave ovens from radar, Blu-ray discs from lasers, or Velcro and Tang from NASA, and there’s no doubt how much government acquisition programs have shaped our lives.

Read the rest of this post on the original site

In the first 25 days at market, Microsoft sold 2.5 million Kinect accessories and now aims to sell five million this holiday season. The sales helped the Xbox become the best-selling console in November.

The Kinect is a motion detection system similar to the Nintendo Wii, but is hands-free and doesn’t require any controllers. Xbox 360 owners can purchase one for $150.

During our visit last week to the Xbox offices in Redmond, Wash., Craig Davison, the senior director of marketing for Xbox LIVE, told us the goal is to broaden the audience for Xbox. He said the competition is no longer limited to PlayStation or the Wii, but extends to Google TV and Apple TV.

Hard-core gamers enthralled with Call of Duty and Halo may shudder at the prospect, but the trend is already in play.

But adding a new kind of player to the platform is critical if Microsoft wants the console to be an entertainment hub. Kinect allows users who’ve never picked up a controller to play, and brings new functionality to hardware, which historically has been marketed as something that must be replaced frequently.

Game console owners are most likely to use the boxes to play games and watch DVDs, but after that, Nielsen reports, entertainment services are a close third. Video-on-demand and streaming services such as Netflix, MLB Network and ESPN3 account for 20 percent of Wii users’ time, 10 percent of Xbox 360 users’ time and 9 percent of PlayStation 3 users’ time.

Davison said the demographics for Xbox started to shift in 2008 when it introduced Netflix streaming to the console. Since then, it has launched a partnership with ESPN, and will launch Hulu Plus early next year. It’s even helping out the top line: Close to 85 percent of Xbox Live’s revenues come from games, with the remainder coming from Zune, he said.

Here are some other numbers to consider:

–Since the launch of Zune on Xbox 360 in November 2009, the pace of HD movie and TV consumption–downloads and streaming–has more than doubled.

–In the last year, Microsoft has seen a 157 percent increase in the time spent watching movies over Xbox LIVE.

–42 percent of Xbox LIVE users who spring for Gold status at $59 a year are watching an average of one hour of TV or movies every day–or more than 30 hours a month.

(Of course, Twitter hasn’t revealed the secret formulas that helped it aggregate, tabulate and rank these topics.)

In the Twitterverse, after the BP oil spill and soccer, the next most popular topic of conversation in 2010 was the movie “Inception,” followed by the Haiti earthquake and the vuvuzela. The iPad, Android, Justin Bieber, Harry Potter and Pulpo Paul round out the top 10. It’s an odd list, indeed.

The person most discussed on Twitter in 2010 was obviously he of the dedicated servers, Mr. Bieber. (It’s somewhat shocking that world events and tech gadgets were able to keep the teen phenom out of the overall top spot.) Beating out her royal highness Lady Gaga, the No. 2 person on Twitter was Brazilian president-elect Dilma Rousseff (pictured).

Here’s the full 2010 list, courtesy of Twitter, followed by 2009′s list for comparison.

2010 Twitter Trends

Overall Top Trends:
1. Gulf Oil Spill
2. FIFA World Cup
3. Inception
4. Haiti Earthquake
5. Vuvuzela
6. Apple iPad
7. Google Android
8. Justin Bieber
9. Harry Potter and the Deathly Hallows
10. Pulpo Paul

News Events:
1. Gulf Oil Spill
2. Haiti Earthquake
3. Pakistan Floods
4. Koreas Conflict
5. Chilean Miners Rescue

People:
1. Justin Bieber
2. Dilma Rousseff
3. Lady Gaga
4. Julian Assange
5. Mel Gibson

Movies:
1. Inception
2. Harry Potter and the Deathly Hallows
3. Scott Pilgrim vs. the World
4. Despicable Me
5. Karate Kid

Television:
1. MTV Video Music Awards
2. Pretty Little Liars
3. True Blood
4. Walking Dead
5. Grammy Awards

Technology:
1. Apple iPad
2. Google Android
3. Apple iOS
4. Apple iPhone
5. Call of Duty: Black Ops

World Cup:
1. FIFA World Cup
2. Vuvuzela
3. Pulpo Paul
4. Dunga
5. Diego Maradona

Sports:
1. LeBron James
2. Wimbledon
3. Manchester United
4. Brock Lesnar
5. Celtics

Hash Tags:
1. #rememberwhen
2. #slapyourself
3. #confessiontime (hash tag started by Usher)
4. #thingsimiss
5. #ohjustlikeme

2009 Twitter Trends

News Events:
1. #iranelection
2. Swine Flu
3. Gaza
4. Iran
5. Tehran
6. #swineflu
7. AIG
8. #uksnow
9. Earth Hour
10. #inaug09

People:
1. Michael Jackson
2. Susan Boyle
3. Adam Lambert
4. Kobe (Bryant)
5. Chris Brown
6. Chuck Norris
7. Joe Wilson
8. Tiger Woods
9. Christian Bale
10. A-Rod (Alex Rodriguez)

Movies:
1. Harry Potter
2. New Moon
3. District 9
4. Paranormal Activity
5. Star Trek
6. True Blood
7. Transformers 2
8. Watchmen
9. Slumdog Millionaire
10. G.I. Joe

TV Shows:
1. American Idol
2. Glee
3. Teen Choice Awards
4. SNL (Saturday Night Live)
5. Dollhouse
6. Grey’s Anatomy
7. VMAS (Video Music Awards)
8. #bsg (Battlestar Galatica)
9. BET Awards
10. Lost

Sports (Teams, Events, Leagues):
1. Super Bowl
2. Lakers
3. Wimbledon
4. Cavs (Cleveland Cavaliers)
5. Superbowl
6. Chelsea
7. NFL
8. UFC 100
9. Yankees
10. Liverpool

Technology:
1. Google Wave
2. Snow Leopard
3. Tweetdeck
4. Windows 7
5. CES
6. Palm Pre
7. Google Latitude
8. #E3
9. #amazonfail
10. Macworld

Hash Tags:
1. #musicmonday
2. #iranelection
3. #sxsw
4. #swineflu
5. #nevertrust
6. #mm
7. #rememberwhen
8. #3drunkwords
9. #unacceptable
10. #iwish

Two lower courts struck down the law as an unconstitutional restriction on freedom of speech.

How the high court rules could affect videogame makers such as Activision Blizzard Inc. (ATVI), producer of “Call of Duty,” and Take-Two Interactive Software Inc.’s (TTWO) Rockstar Games, which makes “Grand Theft Auto.” The case could also have implications for the broader entertainment industry, specifically for producers of violent movies and television shows.

Last week, the court took a broad view of the First Amendment when it struck down a federal law banning depictions of animal cruelty. The court said the law was too sweeping in restricting speech.

Read the rest of this post on the original site

“Call of Duty” publisher Activision Blizzard (ATVI) on Monday filed an annual report with regulators that said the company was “concluding an internal human resources inquiry into breaches of contract and insubordination by two senior employees at Infinity Ward.”

Read the rest of this post on the original site

The answer shouldn’t be a surprise, but somehow the performance Gamestop reported this morning managed to catch Wall Street off guard anyway.

The company’s revenue of $1.74 billion was in line with estimates, but earnings of 23 cents a share missed consensus by five cents. More worrisome is that the company had to knock down its guidance for the rest of the year and says that comparable store sales will be down between four percent and eight percent through 2009. Now Gamestop (GME) shares are trading down five percent in a flat market.

Did I mention that this shouldn’t be a surprise? Game sales, once thought to be immune to the recession, have been slumping for months. Turns out that a tough economy may indeed prompt more gamers to huddle in the basement in front of their Xboxes, but it won’t prompt them to buy new games (used ones may be a different story).

Gamestop says it’s still optimistic that coming games, like yet another Call of Duty sequel from Activision (ATVI) and yet another version of Halo from Microsoft/Bungie (MSFT), will help perk things up. But I’m interested to note that the company didn’t cite the new Beatles version of Rock Band, from Electronic Arts (ERTS) and Viacom’s (VIA) MTV as a catalyst.

By the way, for fantasists who persist in pretending that the Beatles are coming to iTunes at Apple’s (AAPL) event next month: Stop! It’s not true.