The Kyoto-based videogame maker also offered an even bleaker outlook for its full-year earnings for the year to March, saying Thursday that net losses will be three times greater than its projections in October as valuation losses on foreign-currency holdings from the strong yen continued to swell.

Read the rest of this post on the original site »

Nintendo Wii U
The gaming company didn’t have a spot on the show floor at CES, but Nintendo offered private demos of its upcoming Wii U console, the successor to the popular Nintendo Wii.

The “new Wii” comes with a 6-inch tablet-like motion sensor control that offers a full touchscreen and alternative views of the game being played on the TV set. While using a larger controller to play games might seem cumbersome at first, the interactive options it adds can be fun. The new console also works with the standard Wii controllers, as well as the Wii Nunchuk and Balance Board. It supports 1080p HD output, and the games in the demo were remarkably crisp and clear.

But there are still more questions than answers about the Wii U. Its launch date is still pegged to sometime in the later part of the year, but exactly when and how much it will cost is still unknown. And while Nintendo was the front-runner in motion-sensor gaming with the Wii, Xbox Kinect, in the meantime, has been setting new gaming-console standards with its gesture-control technology, content partnerships and even basic voice command.

When asked about content partnerships in the works, Nintendo declined to comment on any specifics. As for voice-recognition technology, Nintendo also declined to say whether it would be added to the Wii U prior to launch; the company did point to some audio capabilities built into the tablet-like controller, and said it is exploring all kinds of possibilities right now.

Samsung Dual-View 3-D OLED TV
That’s quite a mouthful for a television set, so let’s simplify it: This is a TV that lets you watch two programs at the same time on the same screen — and not by creating separate boxes within the screen. Instead, users wear active-shutter 3-D glasses, and each wearer has a different 2-D image projected to them, or even a different TV show or movie.

What about audio, you ask? Good question: The audio for each program is streamed right through the glasses, so you’ll hear your own program, while your significant other sitting on the other side of the couch will hear his or her choice of entertainment.

A dual-view screen has a certain appeal for gamers, and both Sony and LG have introduced such screens for gaming purposes.

For the average TV watcher, this is notably both high-tech and isolating.

LG’s Blast Chiller
You might have heard about this one by now. We still think it’s cool, no pun intended.

It was apparent at this year’s CES show that appliance makers think we want fridges that tweet and washing machines that send messages to smartphones when the laundry is done. While interconnectivity within the home is still in its teenage — if not even earlier — stages, there was one feature of LG’s refrigerators that seemed quite smart: The Blast Chiller is a compartment that chills cans of soda or beer in about five minutes, and can cool down a larger bottle of wine in about eight minutes. It will be available in LG’s new line of refrigerators — price is unknown, but current models cost around $2,500. The Blast Chiller was definitely a favorite with conference-goers — likely because, by the end of the week, many may have wanted a cold beverage.

Corning Gorilla Glass, the Sequel
You might wonder where glass fits in at a tech show, but this isn’t just any soda-lime glass: It’s the ultra-thin, chemically strengthened Gorilla Glass that forms the displays of many smartphones and tablets, and even coats some laptops. Last week, Corning showed off Gorilla Glass that was 20 percent thinner and just as durable (which I was unable to break with a metal stick, as you can see from the photo here, although you might not want to use my arm strength as your gauge).

Gorilla Glass can be used to create stronger, brighter product displays, the company said. Last year, Corning had also said that it believed the future of glass was “3-D” or flexible glass that can be used in different form factors, including keyboards and kitchen countertops. At CES, the company showed how Gorilla Glass 2 can be used in home appliances and dashboard display systems.

Sleeper Pick: “The Patch”
As anticipated, armbands, accelerometers, exercise gear and health-and-fitness-focused apps dominated the digital-health section of CES this year (and even Jawbone’s UP armband made an appearance). But if you’re not ready for a full-time commitment to some of these devices, BodyMedia and Avery Dennison have come up with a temporary adhesive patch to test your resolve. Meant to be worn on the back of the left tricep for up to seven days, the patch combines the sensors of BodyMedia armbands with Avery Dennison’s wearable tech to aid in weight-loss management.

The patch is still awaiting U.S. regulatory clearance, so it may not be available until the third quarter of the year, or later. I’m told it will be less expensive than BodyMedia’s armbands, which run from $150 to $179 (and now work in conjunction with a new digital-wellness platform from fitness guru Jillian Michaels.)

But in future-form, a potentially inexpensive, disposable patch that has some of the same sensory capabilities of an armband could be an interesting fitness “gadget”: Slap it on, forget it’s there while you exercise, save the data and throw it out.

(Blast Chiller photo courtesy of Flickr/LGEPR)

MORE CES NEWS:

• Complete coverage
• HP’s Former CTO: Ultrabooks Are Nothing New, webOS Still Has Life Yet
• Walt Shows Off CES Gadgets for Fox Business News (Video)
• What Kind of Web Video Plans Does Sony Have? (Video)
• Fujitsu Seeking Way Into Crowded U.S. Smartphone Market
• Why Rhapsody Is (Probably) Bigger Than Spotify — In the U.S.
• Microsoft Beefing Up CeBit Presence Even as It Pulls Back on CES
• Inside the CES Lost & Found
• FCC Chairman Has New Tablet, but Same Script: More Spectrum!
• Verizon Wireless: We Want to Connect Five Devices for Every Subscriber
• Ultrabooks From HP and Lenovo That Are (Kinda, Sorta) Different
• Walt and Katie Take a Tour of CES (Video)
• Schmidt-Storm Alert: The Google Chairman Didn’t Like Your Question
• T-Mobile Expands Bobsled Messaging Service
• Intel Shows Just How It Plans to Get Into Phones (Video)
• Motorola CEO: We’re Going to Release Fewer Phones This Year
• Kinect Helps Keep Aging Xbox at the Top of Its Game
• More From T-Mobile CEO: On Pricing, LTE and That Ever-Elusive iPhone
• Exclusive: New Boss Acknowledges Windows Phone Still Has “Awareness Problem”
• And You Thought Jawbone UP Was Going to Miss the CES Party!
• Interview: T-Mobile CEO Says No Second AT&T Deal Out There
• Grover Is at CES and I Am Missing It
• BlueStacks Bringing Android Apps to Windows 8
• Why the Future of TV Won’t Be Here Soon
• Nvidia’s Tegra 3 Tries to Save Battery in All Sorts of Different Ways
• Dynamic Dual Coverage: Ballmer’s Last Act in Vegas and the BCS Championship in 3-D
• Microsoft Phoning In Its Last CES Keynote
• Myspace — Yes, Myspace — Says It’s Going to Sell You Web TV
• Samsung Unveils “Super” 55-Inch OLED TV
• Nokia Unveils That LTE Windows Phone It’s Been Dying to Share
• Steve Ballmer Gives Ralph De La Vega a Very … Vigorous Greeting (Video)
• Interview: AT&T’s De La Vega on LTE, Tablets and Life After T-Mobile
• AT&T’s De La Vega: Shared Data Plans Still in the Works
• LG: 55-Inch Glasses-Free 3-D Screen Is on the Way
• LG Pushes 4G Smartphone Through Verizon: The LG Spectrum
• Live: AT&T’s Vegas Act Stars LTE and, Making Her Return to the Stage, Nokia
• CES Notebook: The Constant Search for Power and Vegas’ Worst-kept Secret
• Belkin Bringing Mobile TV to Lots of Cellphones, Will Anyone Tune In?
• Acer Introduces “World’s Thinnest” Ultrabook and a “Me-Too” Cloud Service
• There Better Be Some Cool Stuff at CES, Because CE Holiday Sales Data Bytes!
• CES 2012: Snooki and Bieber Are In, Gaga Is Out!
• Coming to a Smartphone Near You: Gorilla Glass 2
• RIM Hopes Next PlayBook OS Will Impress at CES
• Ultrabooks, the Ultra-Fancy New Name for Laptops
• At CES, Expect More Gadgets Telling You to Get Off the Couch
• Intel to Detail Its Phone Plans at CES Next Month
• Microsoft Pulling Out of CES After Upcoming Show
• Intel to Detail Its Phone Plans at CES Next Month
• Dell Will Drop the Flashy Vegas Act for CES This Year
• Ultrabook Conga Line Preps for CES 2012

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

The e-commerce giant (a term typically reserved for Amazon in these woods) is one of the larger examples companies from the Bay Area that are setting up shop here and looking to soak up some of the Northwest’s rich engineering talent.

Other companies with satellite offices in the Seattle area include Google, Facebook, Zynga and Salesforce.

“I’m surprised I ended up at eBay, but the story is compelling,” said Ken Moss, who was hired in November to be eBay’s VP of managed marketplaces technology; Moss is GM of the Redmond office.

A long-time Microsoft employee whose claim to fame includes inventing the Pivot table in Excel, Moss more recently co-founded CrowdEye, a start-up focused on search technology and later on stock market prediction.

He said eBay’s dedication to the region is one of the biggest selling points for recruitment.

Most of the 75 employees that currently work there were hired over the past few months, and a small team has been here for seven years. Among the newbies I met were a number of Microsoft veterans who had been there for 12 to 15 years.

Moss says he will report directly to eBay’s CTO Mark Carges, which is “a signal to the whole company that diversified development is for real.”

“We are first-class citizens,” Moss said, referring to sometimes strained relationship between remote workers and a company’s headquarters.

Eric Brill, VP of eBay’s research labs, is also based in the Redmond office, and has been working part-time there since joining the company in 2009.

Moss said eBay will be looking to hire a range of technologists, from college graduates to senior leaders, including developers, testers, researchers, data miners and other positions.

While I was at the office on Tuesday, the mountains were peeking out from the clouds and were easy to spot from the floor-to-ceiling windows on the fourth floor. It was easy enough for everyone to have a window seat in the open-floor plan.

Although the employees just moved in on Monday, a sign outside the building already announced eBay’s presence. Inside, workers were busy putting the final touches on the space to make it feel like eBay. Primary colors of red, blue, yellow and green highlighted the office walls; with a bit of Seattle flair, conference rooms were named after Northwest tribes such as Puyallup and Quinault (and other names that might be difficult for San Jose-based employees to pronounce).

But missing were some of the perks that some recruits expect these day — no shuttles to and from work or fancy cafeterias, for instance. 

In fact, eBay has a long way to go to compare with what Google has done here. Since entering the market seven years ago, Google has hired more than 900 employees, spread across two locations, a spokesperson confirmed.

One office is in Seattle’s Fremont neighborhood; the other is on the Eastside.

The two offices are geographically divided by Lake Washington, which can be crossed by one of two floating bridges — or by boat, if you are crafty enough. The traffic bottlenecks make for a horrendously notorious commute, so having two locations that straddle both sides is a huge perk — like having offices in both San Francisco and San Jose.

Because of Google’s size here, many of its perks are similar to its Mountain View headquarters, including free meals prepared by chefs, frozen-yogurt bars and other, mostly food-based, luxuries.

In eBay’s case, the new digs are located deep on the Eastside, a couple of miles past Microsoft in Redmond, and roughly 15 miles from Jeff Bezos’s empire in downtown Seattle. Recently, Amazon relocated its headquarters to a brand-new campus in South Lake Union, a neighborhood being revitalized by former Microsoft executive Paul Allen.

Other outside companies that have also established sizable tech centers here include Facebook and Zynga. A couple others have gained offices through acquisitions. Electronic Arts, for instance, now has a large office here, after acquiring PopCap; EMC now has big expansion plans here, after purchasing Isilon.

And Geekwire, a Seattle-based technology blog, is good at keeping an ongoing tally, including recent moves into the area by Jawbone and SweetLabs, a San Diego-based start-up, based by Intel Capital and Google Ventures.

Two years ago, Facebook opened an office in the heart of downtown Seattle. It plans to move soon to a 27,000-square-foot space that will have room for about 135 employees. The 70 or so engineers in the office today have worked on projects such as video calling, the Facebook iPad app and other big issues, such as security.

Last April, social game maker Zynga opened an office in Seattle’s historic Pioneer Square neighborhood, hoping to absorb some of the game talent here, spawned from Xbox and Nintendo, and cloud-computing knowledge from Amazon. It has 50 employees today, but declined to say how many it planned to hire in the near future.

As with most of these companies, eBay believes it can find a diversity of talent here that can’t always be easy to hire in the Bay Area.

As a Seattle native, and having covered tech here for the past 12 years, including an eight-year stint at the Seattle Times, I might not be the most unbiased on the subject. But I’ve seen first-hand the breadth of talent here, from Microsoft, Amazon, Expedia, T-Mobile and many others, including a strong start-up pool.

Despite that, the local tech community often suffers from an inferiority complex when it compares itself with the Bay Area, which is much larger. Still, it seems that Silicon Valley companies are finding a number of excuses to travel north to drink from the area’s plentiful tech waters.

Microsoft was proud to announce that over its lifespan, more than 66 million consoles have been sold and that 40 million users have signed up for an Xbox Live membership.

To be sure, the Xbox continues to be one of the top-selling videogame consoles, beating both Sony’s PlayStation 3 and Nintendo’s Wii for the past year.

But breathing new life into the device is the motion-controlled accessory called the Kinect, which was introduced right before the holidays in 2010.

Microsoft provided a sales update last night for the Kinect, saying it has now sold 18 million of the units, which represents about one in four Xbox owners. The last update — that 10 million had been sold — was provided 10 months ago when Microsoft said the Kinect shattered the Guinness Book of World Records for fastest-selling consumer device ever.

But the device’s future is a little hazy.

On the Xbox, one of the most popular use cases has been to play dance simulation games. The controller has yet to break substantially into the more hardcore titles. More recently, Microsoft has made it clear that the Kinect will be an integral part of the user interface by providing a wider selection of entertainment options in the living room.

On Dec. 6, the company rolled out a free update to Xbox Live that allowed people to use the Kinect to conduct a Bing search to find games, music and video across several providers. The user interface also allowed people to control the box with voice commands instead of the game controller.

During the keynote, Microsoft’s CEO Steve Ballmer announced the Kinect will be coming to Windows on Feb. 1.

In a follow-up blog post, Microsoft said the hardware will have to be optimized for the Windows platform, and the price will reflect that. The Windows-based device will cost $250, more than double the price of the Kinect for Xbox, currently $120 on Amazon.

Microsoft also points out that it can mark down the cost of the hardware for the Xbox because it is subsidized by the purchase of games.

The biggest change to the hardware perhaps is that the camera will be able to see objects as close as 40 to 50 centimeters away from the device, whereas the Xbox version requires you to stand a few feet away from the TV and use most of your living room.

Microsoft also said Kinect for Windows will support gestures and voice on Windows Embedded-based devices, such as systems in manufacturing, retail and other industries.

There will be a slightly cheaper version, priced at $150, for qualifying educational users, to fuel additional innovation on the platform.

Coming up with compelling reasons to buy the technology will be important, especially since Microsoft is charging such a premium price.

MORE CES NEWS:

• Complete coverage
• HP’s Former CTO: Ultrabooks Are Nothing New, webOS Still Has Life Yet
• Walt Shows Off CES Gadgets for Fox Business News (Video)
• What Kind of Web Video Plans Does Sony Have? (Video)
• Fujitsu Seeking Way Into Crowded U.S. Smartphone Market
• Why Rhapsody Is (Probably) Bigger Than Spotify — In the U.S.
• Microsoft Beefing Up CeBit Presence Even as It Pulls Back on CES
• Inside the CES Lost & Found
• FCC Chairman Has New Tablet, but Same Script: More Spectrum!
• Verizon Wireless: We Want to Connect Five Devices for Every Subscriber
• Ultrabooks From HP and Lenovo That Are (Kinda, Sorta) Different
• Walt and Katie Take a Tour of CES (Video)
• Schmidt-Storm Alert: The Google Chairman Didn’t Like Your Question
• T-Mobile Expands Bobsled Messaging Service
• Intel Shows Just How It Plans to Get Into Phones (Video)
• Motorola CEO: We’re Going to Release Fewer Phones This Year
• Kinect Helps Keep Aging Xbox at the Top of Its Game
• More From T-Mobile CEO: On Pricing, LTE and That Ever-Elusive iPhone
• Exclusive: New Boss Acknowledges Windows Phone Still Has “Awareness Problem”
• And You Thought Jawbone UP Was Going to Miss the CES Party!
• Interview: T-Mobile CEO Says No Second AT&T Deal Out There
• Grover Is at CES and I Am Missing It
• BlueStacks Bringing Android Apps to Windows 8
• Why the Future of TV Won’t Be Here Soon
• Nvidia’s Tegra 3 Tries to Save Battery in All Sorts of Different Ways
• Dynamic Dual Coverage: Ballmer’s Last Act in Vegas and the BCS Championship in 3-D
• Microsoft Phoning In Its Last CES Keynote
• Myspace — Yes, Myspace — Says It’s Going to Sell You Web TV
• Samsung Unveils “Super” 55-Inch OLED TV
• Nokia Unveils That LTE Windows Phone It’s Been Dying to Share
• Steve Ballmer Gives Ralph De La Vega a Very … Vigorous Greeting (Video)
• Interview: AT&T’s De La Vega on LTE, Tablets and Life After T-Mobile
• AT&T’s De La Vega: Shared Data Plans Still in the Works
• LG: 55-Inch Glasses-Free 3-D Screen Is on the Way
• LG Pushes 4G Smartphone Through Verizon: The LG Spectrum
• Live: AT&T’s Vegas Act Stars LTE and, Making Her Return to the Stage, Nokia
• CES Notebook: The Constant Search for Power and Vegas’ Worst-kept Secret
• Belkin Bringing Mobile TV to Lots of Cellphones, Will Anyone Tune In?
• Acer Introduces “World’s Thinnest” Ultrabook and a “Me-Too” Cloud Service
• There Better Be Some Cool Stuff at CES, Because CE Holiday Sales Data Bytes!
• CES 2012: Snooki and Bieber Are In, Gaga Is Out!
• Coming to a Smartphone Near You: Gorilla Glass 2
• RIM Hopes Next PlayBook OS Will Impress at CES
• Ultrabooks, the Ultra-Fancy New Name for Laptops
• At CES, Expect More Gadgets Telling You to Get Off the Couch
• Intel to Detail Its Phone Plans at CES Next Month
• Microsoft Pulling Out of CES After Upcoming Show
• Intel to Detail Its Phone Plans at CES Next Month
• Dell Will Drop the Flashy Vegas Act for CES This Year
• Ultrabook Conga Line Preps for CES 2012

Well, it may be glasses-free 3-D on the 3DS screen, but it’s not going to look right on most Web sites, as pointed out by the Consumerist.

Fortunately, Nerd Mentality spent some time over the holidays making two comprehensive video tutorials on how to upload and view Nintendo 3DS video on YouTube. There’s a Quick Guide for users who might already be pretty comfortable transcoding video into different formats and sharing it online; there are also two lengthy videos for watching your 3DS video on both Windows and Mac computers.

In short, the recommended specs for 3-D video on YouTube are H.264 1920×1080 Side by Side L/R, though Nerd Mentality points out that YouTube can only display 3-D video at a maximum resolution of 720p, even if it’s uploaded at a higher resolution. YouTube does support glasses-free 3-D, but you may still want to try viewing it with glasses.

The drop-off in players affected almost all developers, but did not hit all titles equally.

For example, Electronic Arts saw 1.2 million fewer monthly users over the past week for its top title The Sims Social; Zynga’s Empire & Allies game lost one million monthly users, and its newest game, CastleVille, lost 900,000, according to AppData, which publishes such information.

On the flip side, many of the games that performed well were old favorites; these logically would have longer-term, more-committed players, who would make a point of returning during the holidays to take advantage of seasonal promotions.

The games that benefited from the holidays include Zynga’s Words With Friends and FarmVille, which gained 1.3 million and 800,000 monthly active users, respectively, according to Inside Social Games. Other gainers rounding out the Top 5 were Tetris Online’s Tetris Battle; Wooga’s kingdom-building game, Magic Land; and Men vs. Women, a role-playing game by Social Point.

Still, the general direction for the week was heading down.

That contrasts with other game platforms, such as consoles, PCs and mobile, which largely benefit from the holidays and from more free time in general.

Console games often skyrocket in popularity as kids and adults unwrap new titles for Nintendo, Xbox or PlayStation on Christmas morning.

PC gaming also typically surges during the season. EA timed the launch of Star Wars: The Old Republic ahead of the holidays, in hopes of drawing new players who would be sold on sticking around for months, after spending time on the game during their time off.

But perhaps the biggest competitor came from mobile, which benefited from breaking records for the number of new Android and iOS devices that were gifted during the holidays. Flurry reported that more than one billion apps were downloaded worldwide during the last seven days of 2011, breaking the all-time weekly record. Games are often one of the most-downloaded categories of apps.

So the more important question to ask is, why would Facebook be an exception, if other platforms performed well?

Clearly, all of the platforms are competing for a limited number of minutes in the day, and so are other forms of media, like the Internet, TV and the movies. But when it comes to Facebook, a larger driver may be the environment — after all, it’s no big secret that a lot of social networking and social gaming is done in the workplace.

In a study conducted last summer, advertising agency Saatchi & Saatchi found that 47 percent of respondents said they play social games at work during a typical day, and that 28 percent play for at least 30 minutes. Without that dedicated time in front of the computer every day, people may have had the opportunity to be more obsessed with other screens, such as phones or TVs.

Another potential reason that Facebook and social games did not see a lift from the holidays is because they have not yet figured out how to capitalize on the Christmas economy.

For years, console games have been timed with the end of the year, so they could be wrapped up and placed under the tree. More recently, smartphones and gift cards for music and apps have helped mobile prosper. Perhaps there wasn’t enough hype and promotion for social games to compete for people’s dollars.

Regardless of the reasons, the drop may ultimately be a small a blip on the radar screen for most game developers, who also see several spikes in activity during the year.

The bigger impact may be felt at Facebook, which takes a 30 percent cut of all virtual goods sold inside social games, and would feel the cumulative impact across all of the games.

According to research outfit Media Create, which closely tracks the Japanese console gaming industry, Sony sold just 72,479 Vitas during the crucial shopping week before Christmas. That’s a massive decline in sales following the device’s debut — well over 75 percent.

In fact, at 72,479, the Vita actually sold fewer units that its predecessor, the PS3.

So what happened?

That’s not at all clear. Certainly, inventory issues could be to blame. The decline could also have something to do with early reports of problems with the device. While Sony was quick to refute such allegations — which ranged from laggy gameplay to freezes and crashes, it wasn’t able to stamp them out before reports echoing them appeared in the broader tech media.

Could such negative chatter have put this big a damper on holiday sales? Maybe. A more likely explanation, though, is the Vita’s high price, its underwhelming lineup of games at launch, and Nintendo’s decision to debut its wildly popular Monster Hunter game at the same time. Knit those three things together with reports of software glitches and you’ve got a pretty big wet blanket.

Either way, those hiccups will be well behind Sony when the PS Vita hits the U.S. and Canada on Feb. 22, with a pretty impressive lineup of launch titles.

(Media Create chart courtesy of Neograf)

That’s in spite of Zynga, the rising star of social gaming, garnering much of the media’s attention last week, when it raised $1 billion in its initial public offering.

In November, Nintendo’s portable handheld, the 3DS, had its biggest single month of sales, representing an increase of more than 215 percent over the previous month; it has now sold nearly 2.5 million units since launch.

The Wii had its biggest Black Friday ever, with more than 520,000 units sold — six years into the console’s life.

The Japanese company also set a software record. Super Mario 3D Land, which was released Nov. 11, is now the fastest-selling portable Super Mario title in U.S. history, and Mario Kart 7 was the fastest-selling Mario Kart game.

In an interview with AllThingsD at the company’s U.S. headquarters in Redmond, Wash., Nintendo’s North America President Reggie Fils-Aime explained what’s driving strong holiday U.S. sales this year, and what’s on the horizon for the maker of games and hardware.

He also left the door wide open for Nintendo to experiment with new business models, including free-to-play or subscription, although he questioned the long-term prospects of social gaming companies, like Zynga.

Here’s an abbreviated version of our chat:

AllThingsD: It seems videogame sales this holiday kicked off with a bang.

Reggie Fils-Aime: We had a strong Black Friday for both our Wii and 3DS business.

The time frame from mid-November until the end of the year is critically important to us, and is driven by a number of software and hardware initiatives.

For the 3DS, we launched Super Mario 3D Land in November. It had the fastest sell-through for a handheld Super Mario game. That gave us a lot of momentum going into Black Friday, and right after Black Friday, we launched Mario Kart 7, which ended up being the fastest-selling Mario Kart, as well.

Together, that propelled our 3DS business. We’ve sold through more 3DS’s in eight months time than the original DS sold in the first 12 months. Our handheld business has a lot of momentum right now.

But it took awhile to get there?

What’s interesting is that we had a very good launch. The first week sales [of the 3DS] were fantastic. The initial rush of sales was really strong. But what happened after that in the spring and early summer time frame is — that’s when sales slowed down a little bit.

It was driven by not having great first-party software, and we were late in bringing some of the online functionality to the 3DS, and that’s when sales began to fall.

That’s when we took drastic action to reduce the price, right after the launch of The Legend of Zelda: Ocarina of Time 3D. Our bet was to regain momentum and make the holidays strong. We are having a strong holiday.

A lot of retailers were concerned that we would see a Black Friday rush and then things would trail off after that. Is that what you are seeing?

We haven’t seen that. We have seen things accelerate as we’ve gotten closer to Christmas Day itself. We are anticipating this week, across all of our businesses, will be the strongest sell-through week of the year.

What about the Wii?

The Wii had a strong Black Friday, too, driven by strong retailer promotions. This was our sixth Black Friday, and it was the best Black Friday week we’ve seen to date, so we’ve had very positive results.

It’s driven by software, and in this case, a new Legend of Zelda: Skyward Sword. It’s a game that’s been recognized by the gaming press to be one of the best games of the year.

The momentum continues for our Wii business, and sales are right on objective.

How does it continue to break records six years in? That’s baffling.

It’s because, even today, the Wii provides a family experience that you can’t get anywhere else. I love the stories I hear of grandparents playing with parents and with the grandkids.

Those are experiences that you can’t get elsewhere. That’s why we continue to break records. Plus, this holiday is the first holiday that it’s available for $149 or below. It’s reaching a whole new demographic that’s wanted to buy in, but couldn’t do it before.

And for consumers, there’s over 1,000 games that have been published, so the breadth of the gaming experience is extremely wide. The Wii continues to be the fastest-selling home console ever in the history of the gaming industry in the U.S.

Does that change as we get closer to the next-generation console, the Wii U?

The market is going to continue to differentiate based on the types of experiences that consumers want. As an example, if I’m the head of a household of a family of four, and my disposable income is $50,000 to $60,000, I’m going to continue to look at the Wii because of the software, and it’s a great entertainment device. For consumers who want to have the latest gadgets and have a higher disposable income, that’s for the Wii U.

We haven’t announced pricing or availability or any other details, but given the current pricing of the Wii, it’s not going to be there.

We’ve been very clear, the market is going to decide how long these products will coexist side by side. Our goal is to launch the Wii U and drive it into the marketplace, but it will speak to a different consumer than the one that is buying the Wii today during the holidays.

What about the other consoles? Both Sony’s PlayStation and Microsoft’s Xbox are about the same age.

All of the competitors haven’t talked about what’s next for them, and given the investments they’ve made in their technologies, for them to move to new systems — at least on the same timing we want to move at — would probably be pretty challenging. But in terms of what they are going to do, when they are going to do it, you’ll have to talk to them.

What do you think of Microsoft’s move to make the Xbox the entertainment hub of the living room?

In the end, the consumer decides what equipment to have in the living room. The interesting thing we’ve found — because of the family entertainment we provide, and the inclusion of Netflix — the vast majority of Wiis are set up on the main TV in the living room.

Are you considering adding more content like live TV or movies?

If the consumer wants live TV, they can get it through the options they have today. We always ask the question, ‘What can we do that’s new and provocative?’ And we will continue to think of new and provocative experiences for the user.

I’ve spent the past week covering Zynga’s IPO. What’s your perspective on social gaming?

What’s the share price? It will be interesting when it breaks below $9 … I have a couple of thoughts on social gaming.

Consumers want to be entertained in a variety of ways, like watching TV or reading a book. The thing about entertainment — as consumers have a range of experiences — their desires for what’s new continues to be pushed out. So delivering the same experience all the time … consumers will move on.

So when I look at gaming experiences on social networks, there’s a variety of entertainment value. Some are strong, some are not. But in the end, how will they evolve? Doing the same thing over and over again is no longer fine.

Is that really fair when you have Mario Kart 7 coming out?

We continue to evolve the experience by providing a level of customization that’s new, or different ways to race with a sail and a propeller that allows you to drift under water. What we’ve done with Mario Kart 7, for some of the tracks, you can actually win when you go off the track, which never existed before. We’ve continued to make it more fun and add more enjoyment for the consumer.

You don’t see that innovation happening in social gaming?

The companies that will win in the social gaming space need to show an ability to provide the new and different experiences, and a way to monetize it. In the end, these are businesses that need to make money.

Is that your comment on the free-to-play model? Will you experiment with free-to-play?

I have two comments on that.

First, we make games for Nintendo devices, and that is a competitive advantage for us. You can only play Mario on a Nintendo device, so from that standpoint, I wouldn’t expect to see our franchises on other platforms, and I would argue Facebook is a platform.

My second point, on whether we will experiment with other forms of monetization?

Certainly.

How that comes about, or which ones we do first, that’s all experimentation that’s going on right now in our various studios.

When Nintendo first announced a big 3DS price drop this past summer due to sluggish sales, it promised early buyers of the device — Nintendo 3DS “Ambassadors” — that they would be able to download new NES Virtual Console games at no charge before the games became available in the Nintendo eShop to the general public.

Starting today, even more free games are available to 3DS buyers. This time, they’re Game Boy Advance titles — remember Game Boy? — including The Legend of Zelda: The Minish Cap, Wario Land 4, Mario vs. Donkey Kong, Mario Kart: Super Circuit and a handful of others, numbering 10 in total.

The games are available to customers in the U.S., Europe and Japan a day ahead of the highly anticipated Sony Vita handheld launch in Japan.

The Game Boy Advance is a handheld gaming console introduced by Nintendo in 2001, more than a decade after the original Game Boy was launched and a few years ahead of the popular Nintendo DS’s debut. The device had a 32-bit processor and was described at the time as Nintendo’s fastest-selling game system ever. The last new title for the Game Boy Advance was brought to market in 2008.

For the 3DS, Nintendo can’t give away games fast enough. The freebie games are part of an overall push to sell more of the handheld unit, which had struggled to gain traction since its launch in March of this year. Nintendo said the 3DS got a much-needed boost, driving hardware sales up 49 percent, when Nintendo’s Super Mario 3D Land game hit the market in late November as part of a bundle.

Also, to give credit where it’s due, 3DS is kind of a big deal in Australia, according to the Sydney Morning Herald!

Specifically, it sold a record 1.7 million units in November, more than two times the competition from Nintendo and Sony. And while most of the people who are buying Xbox 360 game machines are using them to play games, Microsoft is being increasingly clear about its broader ambitions for the gadgets: As Simulmedia’s Dave Morgan puts it, these things are becoming cable set-top boxes.

That’s the upshot of the recent overhauls, which make it possible to control live and on-demand TV and Web video via its box. Which is exactly what Google has tried to do, with little success, and what everyone assumes Apple is going to try very soon.

It’s important to note, again, that Microsoft isn’t trying to work around the existing cable infrastructure — if you’re looking to cut your cord, the Xbox 360 won’t help you there. But if the game unit’s really big installed base — still growing! — does start using it as a video platform, then in short order Microsoft is going to have a whole lot of eyeball muscles to flex, if I can mix my metaphors. And then things could get very interesting.

“This November marks the best November on record for sales of new physical content,” said NPD Group’s Anita Frazier.

Activision said within the first five days of sales, Call of Duty shattered all previous entertainment records, grossing more than $775 million. In fact, its first month of sales beat the game’s predecessor by about 7 percent, NPD added.

In NPD’s report released today, it analyzed videogame sales for November, taking into account sales made at retail across both hardware and software. It excludes the sale of digital content, like mobile games and downloadable content.

In November, NPD said software sales totaled $1.7 billion, jumping 15 percent from $1.45 billion in the same month last year. Hardware sales weren’t so lucky, falling 9 percent to $982 million from $1.1 billion in November 2010.

The second-most popular title during the month was Bethesda’s Elder Scrolls V: Skyrim for Xbox, PlayStation and the PC. “In one month, Elder Scrolls V: Skyrim is just about half a million units shy of matching Elder Scrolls IV: Oblivion in lifetime sales. Its first month performance was a five-fold increase over Oblivion’s first month sales,” Frazier said.

The rest of the titles in the top 10 are:

• Battlefield 3, Electronic Arts
• Assassin’s Creed: Revelations, Ubisoft
• Just Dance, Ubisoft
• Madden NFL 12, Electronic Arts
• Uncharted 3: Drake’s Deception, Sony
• Saints Row: The Third, THQ
• The Legend of Zelda: SkywardSword, Nintendo
• Batman: Arkham City, Warner Bros. Interactive

But the 3-D handheld gaming device has gotten a boost from recent game releases, and the gaming giant hopes two more items will keep the hardware’s momentum going for the holiday season.

This Sunday, Nintendo will release Mario Kart 7 for 3DS. It’s the second game in the Mario franchise aimed at the portable device in the past two weeks. Retailing for $39.99, Mario Kart 7 includes new courses and kart abilities and supports the 3DS StreetPass feature, which allows users to wirelessly connect to other “Mii” characters as they pass each other on the street or are in the vicinity of each other.

The company also plans to release a pink version of the 3DS, bundled with one of its Nintendogs + Cats games. The pink 3DS will cost $169.99 in the U.S., the same price as the standard Nintendo 3DS system. Nintendo had previously said a pink version was aimed at girls (sigh, but they do like lots of other colors, too).

The Nintendo 3DS, the company’s first 3-D portable gaming handset, hit the U.S. in March, at a price of $249.99. The device has an autostereoscopic screen — which means glasses aren’t required to see the 3-D imagery — and a depth slider that adjusts the intensity of the 3-D.

Consumers were less than thrilled by the 3DS, with many citing vision problems and high game prices, forcing Nintendo to later reduce the price. The move resulted in a 260 percent sales jump, with Nintendo selling 235,000 units in August, ranking it the second-best-selling piece of gaming hardware in the U.S. that month.

The 3DS got another boost when Nintendo’s Super Mario 3D Land game became available Thanksgiving week, as part of a bundle with a red 3DS. Nintendo of America President and COO Reggie Fils-Aime said the game was the fastest-selling portable Mario game in Nintendo’s history, and that interest in the game drove hardware sales up 49 percent.

“We believe more and more that software drives hardware,” Fils-Aime said.

Fils-Aime said Nintendo continues to invest in 3-D technology in terms of content, but for now, consumers shouldn’t hold their breath for a next-generation 3DS.

“I wouldn’t expect a complete redesign of the hardware in the near-term,” he said.

In addition to the new pink model, Nintendo 3DS is available in the U.S. in blue, black and red. A white version of the device is sold in Japan, although Fils-Aime noted that Nintendo’s white handheld DS and DSi devices haven’t sold as well in the U.S. as other colors have.

Experts Give the New Xbox Raves for Control, Creativity
(Dec. 6 2001)
Photo: Mario Tama/Getty Images

Microsoft sold more than 960,000 consoles last week, with a majority flying off the shelves within a single 24-hour period.

Nintendo also said the Wii had the biggest Black Friday ever, selling more than 500,000 units on the day after Thanksgiving.

At one point during the shopping madness, a shopper pepper sprayed a crowd at a Wal-Mart to get her mitts on an Xbox (although reports now say police are investigating the incident to determine the cause of the attack).

Sony declined to release sales figures for the PlayStation 3 last week, but it is likely benefiting from a recent $50 price cut.

Such strong sales are mind-blowing.

People are lining up for — and in some cases fighting over — hardware that is five to six years old. It’s difficult to imagine any other consumer hardware that could attract that kind of demand after such a long period of time.

All three are nearing the end of their life cycles. The Nintendo Wii and PlayStation 3 are both five years old, and the Xbox 360 is a year older.

Nintendo announced that it will release a new console, the Wii U, later next year. Microsoft and Sony have not said anything official, but they are both expected to follow with competing launches in the same time frame.

It has long been a pattern for all three rivals to release new hardware at the same time. A European PlayStation executive recently hinted that Sony’s plan was to continue that trend because it was “undesirable” to be significantly later than the competition, according to IndustryGamers.com.

Despite the odds, there are at least three reasons why sales continue to do well.

The lineup of games is as strong as it has ever been for the consoles; all three have tried sprucing up the hardware with accessories and adding downloadable content; and, finally, consumers don’t have a choice — the only alternative is to wait another year.

First, the games: This year, publishers waited until now to release some of the hottest titles of 2011; hardcore gamers in particular will have their choice of any number of blockbuster hits.

Activision’s Call of Duty game is already a runaway success, grossing $775 million in the first five days it was available, to shatter all entertainment records.

Also in the hardcore genre is Electronic Art’s Battlefield 3, Ubisoft’s Assassin’s Creed, PlayStation’s Uncharted 3 and Rocksteady’s Batman: Arkham City, which are all going head to head this holiday season.

But the consoles don’t just serve the hardcore genre anymore.

Last year, both Sony and Microsoft released motion-controlled gaming systems to rival the Wii’s technology, which has always been considered more family friendly and easy to use.

This holiday season, Sony and Microsoft are offering the most games ever for the Move and Kinect, respectively. Microsoft will have 75 new Kinect games available for the Xbox this holiday, four times last year’s number. Sony said the PlayStation Move is expected to launch 26 titles.

In addition to being used to play games, the consoles are turning into entertainment systems for the living room.

It started with the ability to use the Internet-connected boxes to stream Netflix to TV screens. Now the consoles are turning into media hubs, playing video, music and other content that is readily available over the Internet.

Microsoft and Sony have made entertainment a particular focus between their respective online networks, Xbox Live and PlayStation Network.

Microsoft will make a huge push on Dec. 6, when it rolls out a free update to Xbox Live. Users will be able to conduct a Bing search to find games, music and video across several providers. To make it even more family friendly, the Xbox Live user interface will be controlled with voice commands, rather than by the game controller.

By the end of the year, Microsoft expects that nearly 40 TV and entertainment providers — including Comcast, Netflix, Hulu, ESPN and HBO GO — will be available on its system.

All of these reasons added up could keep the pedal on the gas for what in any other segment would be considered ancient technology.

In an interview, John Koller, director of marketing for Sony’s PlayStation, argued that there’s a lot left in the current generation of consoles.

As an example, he said its predecessor, the PlayStation 2, is 12 years old, but continues to be used in homes around the U.S. as a game player and DVD player. Similarly, the PlayStation 3 substitutes as a Blu-ray player.

Overall, the PlayStation 2 ended up reaching nearly half of all U.S. households.

If that can be used as a guide, then the PlayStation 3 still has a very long way to go. In fact, the goal may be unattainable if new hardware is coming around the corner.

To date, Sony has sold 18.7 million PlayStation 3’s in the U.S. That makes up just a fraction — less than 17 percent — of the 112.6 million households, according to the most recent U.S. Census Bureau figures.

“We are nowhere near where we could be,” Koller admits.

Next year, the true testament will be how the hardware sells as we get closer to the release of Nintendo Wii U and consoles.

With the help of West Coast Customs, the auto body shop known from the MTV series “Pimp My Ride,” Nintendo was able to create real-life replicas of the classic Mario Kart and Luigi Bumble V Kart.

As in the game, Mario’s shiny red go-kart comes complete with a glider attachment for flying; Luigi’s kart is tricked out with a rear propeller for underwater navigation.

Here’s Reggie Fils-Aime, president of Nintendo of America, posing in Luigi’s Kart:

And, here’s Mario’s Kart:

The karts will be on display at the LA Auto Show, Nov. 18-27 at the Los Angeles Convention Center, and there is a contest for a chance to bring one home, via GameStop’s PowerUp Rewards program.

To win, PowerUp members must make a purchase or trade in a game at GameStop in December.

Early next year, an episode of “Inside West Coast Customs” will show how the vehicles became a reality.

In all, physical sales of both hardware and software totaled $1.08 billion, up from $1.07 billion year over year, according to NPD Group’s monthly U.S. game industry report.

The biggest console performer was the Xbox for the ninth month in a row. It sold 393,000 units, up 21 percent compared to October 2010 — resulting in a 44 percent industry share.

David Dennis, Group Product Manager of Microsoft’s Interactive Entertainment Business, told AllThingsD that sales were driven by blockbuster games that started to launch in September and grew in October.

During the month, six of the top 10 console games were available on the Xbox, including Battlefield 3, Batman, NBA 2K12, Rage, and exclusives including Forza Motorsport 4 and Gears of War 3.

The other hardware platform that performed surprisingly well was Nintendo’s portable 3DS, which clearly has benefited from a steep price drop. After a poor reception in July, Nintendo slashed the price of the 3DS to $169.99 from $249.99.

The 3DS was the second-best-selling hardware platform, and when combined with the older DS model sales, Nintendo sold 25 percent more compared to last October.

In all, it sold 1.65 million units, Nintendo said, to put it on track to surpass the first-year total of the Nintendo DS, which sold 2.37 million in its first 12 months on market.

Nintendo’s home console system, the Wii, didn’t do as well. It sold 250,000 units.

It might not sound like much money, but the round comes from a top-notch list of investors, and has been entrusted in 19-year-old Joshua Buckley.

Investors participating in the round include Andreessen Horowitz, SV Angel, Y Combinator, Yuri Milner, General Catalyst, Ignition Partners, Raymond Tonsing and Alexis Ohanian.

Buckley sold his first start-up at the age of 15. That company was an online community that produced custom avatars. After that, he became an active angel investor at the age of 16, and entered the Y Combinator class 0f 2011.

Now he has replicated Nintendo’s hit game Pokemon for the iPhone — something Nintendo has been reluctant to do.

“Nintendo has dropped the ball on these people,” Buckley said. “They’ve focused on their declining consoles, and the eyeballs are moving to other platforms. We are targeting people in their early to mid-20s, who have a nostalgic feeling for Pokemon.”

Buckley has recruited TJ Murphy to help him out. Murphy, who will serve as president and co-founder, was most recently a product manager at Zynga, where he worked on some of the company’s hit titles, including FarmVille, CityVille and Adventure World.

Murphy, 25, says he left a considerable amount of stock on the table when he left the pre-IPO Zynga.

“It was a tough decision,” he said. “That’s not just Monopoly money. It was going to be liquid in a matter of months … But it came down to risk and control. I wanted a place where I was making the decisions, and the one responsible for the mistakes.”

Before Zynga, Murphy co-founded the Social Gaming Network (SGN), which was recently acquired by MindJolt, the game distribution company acquired earlier this year by Myspace co-founder and former CEO Chris DeWolfe.

With MinoMonsters, Buckley and Murphy believe they have an opportunity to build a megabrand like Angry Birds or Cut the Rope.

In the game, which will go live on iPhone Dec. 6 and will cost 99 cents, players have to care for their monsters by feeding, petting and spending time with them. Players can then pit their monster against other monsters in battles.

The Angry Birds playbook would say that the next step for MinoMonsters is to sell stuffed animals and other merchandise, and then bring the characters to life on TV and the big screen.

The sharp earnings downturn is the latest problem facing the Japanese videogame maker, which is struggling to keep pace with a technological sea change that threatens to alter how consumers play video games, while grappling with the twin cocktail of a soft global economy and a strong yen that is hammering Japanese exporters.

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Vita, the upcoming handheld device, is hoping it’s in a class of its own, says John Koller, Sony’s PlayStation director of hardware marketing.

It better be.

In the three years the device has been under development, smartphones and tablets have become mainstream and the need for dedicated portable gaming devices has been weakened.

And if Nintendo’s 3DS is any indication, Vita’s prospects aren’t good. The 3DS struggled after missing the holidays last season, and Nintendo was forced to cut the price drastically almost immediately.

“This is a larger game experience. We think we are insulated from the competition,” Koller said. “We love mobile games. Mobile and tablets games are additive.”

As an example, while an HD game on the iPad is large, a game on the Vita could range from 2GB to 4GB. That would take up a substantial amount of the iPad’s memory, and take an awful long time to download.

The horizontal device is large and fits in your hands comfortably.

There’s a touchscreen on the front and a touchpad on the back, there are both forward-facing and rear-facing cameras, there are dual analog sticks to support first-person shooters, and there’s integration with the PS3, which will allow game makers to provide the ability to start playing the game on the console, leave the house and pick up where you left playing on the Vita. If developers allow it, users will also be able to stream games that they bought for the console to their handheld using Wi-Fi.

The Wi-Fi version starts at $249 and the 3G version costs $299, not including a data plan with AT&T.

As with any new connected gaming device, it will also experiment with things such as augmented reality, social features — such as Twitter and Facebook integration — and location-based services.

Koller described the demand as robust. Of the current PlayStation Portable owners, 60 percent have said they will upgrade in the next 18 months, and of the console owners, 63 percent said they would buy one. Of course, those two markets have a lot of overlap.

Initially, the device was expected to come out before Christmas, but after it was announced at E3 in June it faced delays. Recently, Sony announced it would come out in Japan first, and then hit the U.S. and other areas on Feb. 22.

Koller said the delay was due to meeting demand and that pre-orders are “substantial.”

He added, “We’ve increased production materially since E3. We learned our lesson to make sure you have enough product.”

Koller argues that the PSP launched in March 2005 and it still sold one million units in the first week, so missing the holidays is not detrimental.

He believes with more than 100 substantial games in development worldwide, there will be plenty of reasons for people to buy it right away. That’s where the Nintendo 3DS faltered: Not enough 3-D games at launch to justify buying it.

Today, Sony is announcing a special bundle that will launch a week early for those who are particularly anxious to get their hands on the device.

The PS Vita First Edition Bundle will be available for pre-order starting today. For $350, consumers will get the 3G version of the device, a 4GB memory card, a travel case, and the game, Little Deviants. The devices will be available for pick-up on Feb. 15.

That figure confirms that Nintendo is definitely one of this country’s leading portable gaming manufacturers, but for comparison’s sake, we dug up numbers for the iPod touch, which is likely Apple’s most comparable device, rather than the always-connected iPhone or its larger and more expensive cousin, the iPad.

In a lawsuit, Apple revealed that as of March 2011 it had sold more than 60 million iPod touch devices worldwide since late 2007.

While those aren’t entirely comparable numbers — one is worldwide and the other is only in the U.S. — many are saying that Apple’s products are starting to eat into Nintendo’s traditional base of players. With these figures being so close, and Apple claiming that the iPod touch is the No. 1 portable game player, you can start to see why.

Last month, Nintendo sold more than 260,000 Nintendo 3DS units in the U.S., an increase of more than 10 percent from the previous month, following a much-needed price drop on Aug. 12.

The numbers were part of the NPD Group’s monthly figures, which state the overall health of the videogame industry. Generally, September is a sleepy month, as consumers hold off on making any big purchases and manufacturers delay big launches until the holidays.

The NPD Group said spending on hardware and software in September totaled $1.16 billion, falling 6 percent from the same period a year earlier, when consumers spent $1.23 billion. The sales only represent physical retail sales and do not include digital sales, which are fast becoming a big chunk of the industry.

During the month, software sales were helped out by the newly released Madden NFL by Electronic Arts, which was the top selling-game during the month.

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.

Sitting down to chat last year with Amazon.com Inc.’s Chief Executive Jeff Bezos, television host Charlie Rose announced that the two would discuss “the Kindle,” Amazon’s e-reader. But throughout the interview, Mr. Bezos repeatedly dodged the word “the,” saying how “Kindle is succeeding,” that “Kindle is a companion to tablet computers” and touting how many e-books are “available for Kindle.”

Mr. Bezos is part of a growing cadre of marketers who conscientiously object to using articles — the tiny English words “the,” “a” and “an” that typically precede many nouns.

Nintendo Co.’s website shows gamers “what Wii is all about.” As far back as 1984, Apple Inc. said in a commercial that it would “introduce Macintosh.” Today, an Apple video enthuses: “There’s never been anything like iPad.” Some companies make the drop official. Research In Motion Ltd.’s style guide specifies that “BlackBerry” should be used “as an adjective and not as a noun or verb.” An unacceptable usage, it says: “the BlackBerry.”

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But never fear, better times await. The next four months will generate more than half of the industry’s sales that are made at retail, which could be more than enough to bring things back in line with last year’s performance.

The NPD Group today released its assessment of retail sales in August, which does not take into consideration electronic or other digital channels where games are sold.

NPD analyst Anita Frazier said almost everything related to games — software, hardware and accessories — declined in August, compared to the same month a year earlier. The one exception was portable game sales, which were driven by sales of Nintendo DS and 3DS software.

Price cuts benefited both Nintendo and Sony.

Sony trimmed the price of the five-year-old PlayStation 3 to $250 from a previously recommended price of $300, while Nintendo slashed the price of the struggling 3DS by $80, after the glasses-free 3-D handheld device had been on sale for only four months.

Nintendo said about 185,000 units were sold after the price reduction on Aug. 12, an increase of more than 260 percent during the comparable 19-day time period in July. During the entire month, the company sold 235,000 3DS game devices to outsell the original Nintendo DS, which still managed to sell 165,000 in August.

The PS3 price cut also allowed it to drive a notable uptick in sales year over year.

Xbox continues to maintain its lead over other consoles in the market, selling 308,000 units in August, which means it has outsold any other console maker for 14 of the past 15 months in the U.S.

In August, total U.S. game sales from retail, including all hardware and software, was $669.9 million, falling 23 percent from $873.8 million a year ago. Software sales in the period were hit the hardest, recording a 34 percent drop to $264.8 million from $403.5 million a year earlier.

Frazier attributed the bulk of the decline to Electronic Arts shifting the release of its latest Madden football title from August to September. The game launched on Aug. 30, which falls within NPD’s September 2011 reporting period.

Otherwise, the best-selling game in August was Square Enix’s Deus Ex, followed by EA’s NCAA Football 12 and Activision’s Call of Duty: Black Ops.

Frazier added that the rest of the year could more than make up for the softness seen in 2011.

“Even though year-to-date performance of the new physical portion of the industry is down 5 percent, more than half of industry sales in this channel are still to be realized in the back four months of the year,” she wrote. “Given the strong release schedule in the coming months, new physical retail sales could still be flat to slightly up once full-year sales are tallied.”