Big video games like Mass Effect 3 and Halo 4 aren’t going away anytime soon. But a growing cadre of independent games developers is taking the road less traveled — keeping teams tiny and visions narrow.

In fact, they say they don’t want to grow. And despite that unorthodox philosophy, they’re reaching big audiences, making some impressive money and shaking up the games industry as a whole.

These independent developers, or “indie devs,” fill a huge spectrum of opinions about what video games can and should be. But, as with their counterparts in music and movies, it’s not always easy to nail down which games are indie and which aren’t.

Up-and-coming publishers like Zynga and Rovio started out small and indie, of course. In the loosest sense, the term applies to pretty much anyone who’s not one of the big legacy game companies, such as Nintendo, Sega or Electronic Arts.

However, after they put out a hit or two, a few independents peel off from the pack by continually hiring and growing. Contrast Zynga, which has nearly 3,000 employees at 21 offices around the world, with unconventional companies such as San Francisco-based Bolt Creative, where the two co-founders pointedly avoided hiring anyone but themselves.

“We made a decision to stay small,” said Dave Castlenuovo, Bolt’s only programmer. “To me, I get the most enjoyment working out of my home, getting to see my wife.”

Castlenuovo and his design partner Allan Dye eschewed the new-normal start-up song-and-dance: Securing VC funding, finding office space and building a company on the idea of scaling bigger and bigger.

Instead, they found huge success, despite staying small, with their flagship game Pocket God. The game lets sadistic smartphone owners punish an island of perennially doomed cartoon pygmies.

Pocket God was a one-off project started in late 2008, which went from idea to a first version on the iPhone App Store in about a week, Castlenuovo said.

But it has outperformed most one-week larks. The 99-cent app and its downloadable extras have earned about $7.5 million so far.

And the game’s pygmy characters have racked up an additional $600,000 through a spinoff comic book series, which is not bad for a two-man team.

So, how does a little operation such as Bolt Creative thrive while a company like Nintendo, with access to some of the world’s top talent and most beloved video game characters, is reporting to investors its first annual loss since 1981?

Part of it, of course, is the conventional wisdom that smaller start-ups are just nimbler on their feet. But to get at the real answer, you have to look primarily at three big companies: Valve, Apple and Facebook.

On PCs, Valve’s Steam Store eliminated the need for developers to get their games distributed in brick-and-mortar stores in order to find a mass paying audience of gamers. Mobile app marketplaces, starting with Apple’s on iOS, similarly leveled the playing ground for smartphone game developers.

And games have also infiltrated social networking sites, especially Facebook, although the spoils are decidedly lopsided: Zynga alone was responsible for 15 percent of the company’s revenue in the first quarter of 2012.

To raise the money to make new games, new avenues are also springing up fast. In March, San Francisco-based Double Fine Productions solicited donations on Kickstarter for a new point-and-click adventure game in the style of the classic games made by its founder, Tim Schafer. They met their $400,000 goal in about eight hours and ultimately raised $3.3 million from Kickstarter users.

These sorts of developers don’t always have it easy: They have to do more with less, taking on more responsibilities than they might have to in much larger teams. And they can’t bank on legacy pieces of intellectual property for success.

Not that this is an equally bad fate for everyone. For his part, Castlenuovo compares himself to Robert Rodriguez, an independent filmmaker who famously produces, writes, directs, shoots and edits most of his movies solo.

“I enjoy wearing many hats,” Castlenuovo said.

Plus, indie devs can now focus more on making the games they’re most passionate about and less on how they’re going to sell them, at least initially.

Derek van Vliet, co-founder of a Toronto-based indie shop called Get Set Games, seems to be in a good place. His company’s casual iPhone/Android game Mega Jump, initially developed by just three people (now upped to four), has racked up 24 million downloads since May of 2010.

But van Vliet grumbled that bigger companies like Electronic Arts can temporarily take over app store charts by throwing around the weight of some of their biggest properties, including Madden, Tetris and Scrabble.

“That’s getting a lot from very little work for them,” he said.

For better or for worse, the business of games is not a meritocracy. But it might be a mistake to assume it’s all one big, cohesive business in the first place. After all, the devs say, isn’t at least some of what we’re doing art?

Art vs. entertainment?

If you want to quickly start a fight on the Internet, you should follow Roger Ebert’s lead and assert in broad strokes that video games are not and will never be art. Even among the game developer community, the dividing line between art and entertainment is fuzzy at best and may be impossible to place outright.

After all, some games are just casual fun. But others are deeply personal for their creators and, if you believe their many fans, are more meaningful and higher-quality as a result.

George Fan, co-creator of Plants vs. Zombies, said he knows his game is a piece of entertainment, which he developed independently and later distributed through PopCap before EA bought the company in 2011. But he questioned whether art and indie projects even have a chance amid the business pressures at EA.

“It’s pretty much as far as you could get from indie in any company,” Fan said.

Castlenuovo echoed the sentiment, noting big companies are best able to serve their investors when they focus on making top-10 hits.

“I’m going to stick with the creativity,” he said.

Even if you accept that some developers are making artful games, getting others to appreciate them in that way is an uphill battle. In the delightful new documentary “Indie Game: The Movie,” developer Jonathan Blow explains how his indie mega-hit Braid explores the concept of trying to reverse past mistakes by giving players the ability to rewind time.

However, the directors then cut to an online video reaction to the game from Soulja Boy. The young rapper enthusiastically tells his fans that Braid “ain’t got no point … you just walking around, jumpin’ on shit.”

Still, when developers can work by themselves or on very small teams, rather than as part of a publicly traded company, they’re freer to pursue “passion projects” that mean more to them. On the surface, that’s good, but it can also be a sort of psychological poison.

For Leo Alterman, a hobbyist indie dev and senior at Stanford University, making games is about recreating a sense of wonder he felt as a child playing Nintendo 64. And he’s not just talk: A game he built from scratch starting in high school, Tasty Static, has racked up 100,000 free downloads online in the past two years.

But Alterman said he could never make games his profession — the personal stakes are just too high.

“If you’re doing that as a job, and you fuck it up, then yeah, you’re kind of in trouble,” he said.

Indie devs straddle the stressful line between living to work and working to live. Despite his quest for childlike wonder, Alterman describes himself as morbid, and he’s in good company: In “Indie Game: The Movie,” one developer compares his work to being in a concentration camp as a major deadline approaches. Another earnestly threatens to kill himself if he can’t finish his game as planned.

“So, that’s my incentive,” he deadpans.

It seems unlikely that gamers would look at the latest update to Madden or Words With Friends and use it to judge those games’ creators. But Edmund McMillen, co-creator of the popular (and maddeningly difficult) indie platformer game Super Meat Boy, said the game and its public image are so tied to his story and personality that it’s impossible not to feel judged.

“We put everything into it,” McMillen said of himself and his “Team Meat” partner Tommy Refenes. “We are the game.”

The mainstream response

Just as with indie music and movies, there’s a more emotional response to the idea of a game produced by one or two people than one produced by a faceless company. And finding indie game developers who are willing to question the values of big games companies — like EA and Zynga — is like finding sand on a beach.

“That doesn’t seem like art to me,” the hobbyist dev Alterman said of Zynga, which did not respond to requests for comment. “They’re playing a different game.”

“Zynga’s a business,” Team Meat’s McMillen said. “I would go so far as to say they don’t even make games. They make money.”

“That sounds like hell to me,” Refenes says in “Indie Game: the Movie,” after he’s asked about working at EA or Epic Games.

Plus, players are responding to independent developers in a big way. According to the mobile app analytics and advertising firm Flurry, 56 percent of all mobile games played in Q1 2011 were made by indie devs; one year later, in Q1 2012, that share had jumped to 68 percent.

But those opinions and trends don’t seem to deter Rich Hilleman, EA’s chief creative officer and one of the company’s first 20 employees from the early 80s. He’s careful to praise talented indie devs who have gone on to join EA, but also stresses the administrative headaches that come with staying small.

“I want to not have to worry about clearing credit cards and legal issues and translating this stuff into Maltese,” he said. “I think you recognize that it was fun to be independent, except that that stuff wasn’t all that fun.”

When Hilleman joined EA, the company didn’t do any development in-house; it was solely a publisher that connected independent game designers with bigger audiences. Within the gaming world, the company helped make rock stars out of developers like Bill Budge, whose game, Pinball Construction Set, was packaged like a music album, with Budge’s name in giant script on the front.

Not really something you’d see today. I’ve sunk countless hours into EA’s Need for Speed racing game on my iPhone, but I couldn’t tell you the name of a single person who helped make it.

When I told him this, Hilleman countered that customers, not publishers, are the ones who decide who the stars are, although it’s hard not to wonder why that star status doesn’t correlate with hugely popular games like EA’s Star Wars: The Old Republic, which gained 1 million subscribers within three days of its launch last year.

Hilleman readily volunteers that one of the closest modern rock-star successors to Bill Budge is an indie dev: Notch, the creator of Minecraft. In the past three years, Notch’s sandbox game has built an extremely passionate community of over 16 million players, despite having primarily three programmers listed in its credits.

Despite all this, Hilleman draws a firm line in the sand in opposition to independent developers who say they’re freer to pursue “passion projects” than developers at EA.

“Building video games is just hard,” Hilleman said. “There is no such thing as building something you do not like. It just does not happen.”

Of course that doesn’t mean life is necessarily easier for devs who, at big companies, don’t have to translate anything into Maltese. James Swirsky, co-director of “Indie Game: The Movie,” said he saw plenty of hardship in his two years as a games tester at EA.

Devs there, he said, “were just as stressed out and pushed to the brink as the guys you see in the film.”

The key difference

Independent game developers share a lot of DNA with their big-business brethren, and the differences aren’t big enough to merit a culture war or to force audiences to choose between one or the other.

Furthermore, the mainstream world is not clueless: EA has learned its lessons from the years in the mid-aughts when console games seemed stuck in a rut, and has tried to reach out to and learn from the independent community — although Hilleman is quick to point out the irony of the situation, since in the 80s “Electronic Arts” was still small enough to be synonymous with the indie scene.

Meanwhile, Zynga has established a successful pattern of growing by acquisition, looking for the independent shops that are happy to sell out (not that that’s a bad thing, as OMGPOP and others can tell you).

But there’s still a key difference between the independents and the rest, and everyone watching the gaming space should note: With the rise of indie games as an economic force to be reckoned with, the charges are set for an explosion of creativity in the gaming world in the coming years. Indie devs have been around for decades, but now it’s easier than ever for them to make a comfortable living while making the games they personally pick and love.

The “hardcore” gamer community often derides social games on Facebook and mobile devices as too simplistic. But that will change. Games will get better and more ambitious as barriers to entry continue to fall and more outlier voices come into the mix.

With indies coming into the spotlight, games may finally be able to come into their own. Call it a real-world power-up.

Typically at this point in the hardware cycle, he said, the cost of developing new videogames would lead to a loss. But in a conference call with investors yesterday, Riccitiello said revenue from digital content will keep EA profitable.

“In the face of, unfortunately, somewhat of a headwind relative to console, we’re getting top line growth, robust digital growth, robust margin expansion, robust EPS growth, while affording the investment in the next-gen console. I don’t think, going back to our foundation in ’82, that’s ever happened before. So what we are guiding for is entirely unprecedented, and it’s a function of everything we’ve been saying on the call so far. … It’s our hope to be able to accelerate top line through a transition and accelerate bottom line growth through a transition because we won’t be facing sort of negative console compares.”

Nintendo expects to release the Wii U later this year, which will require new games that tap into both the TV and a touchscreen device. Neither Microsoft or Sony have unveiled plans for their respective next-generation hardware systems, the Xbox and PlayStation. Riccitiello did not mention the new consoles by name, and instead referred any direct questions about hardware to Sony, Microsoft and Nintendo.

“We intend to invest $80 million in Gen4 console development in fiscal ’13. We are strong believers that console will return to strong growth, and represent a great opportunity — one that is in lockstep with our digital plans.”

In fiscal 2012, EA generated $1.2 billion in digital revenues, representing a 47 percent increase year over year. In the past six months alone, FIFA 12 — one of the company’s traditional packaged good titles — was able to break $100 million in digital revenues for the first time. This year, it’s predicting digital revenues of $1.7 billion, representing 40 percent of the company’s overall business.

Even though Riccitiello painted a positive outlook, he failed to turn to the tide.

Along with a broader market meltdown, the company’s stock fell 65 cents, or 4.3 percent, at $14.48 a share. At that price, the company’s stock is off more than 40 percent from its 52-week high of $26.13 a share.

During the call, Riccitiello also tried to stress that while Star Wars: The Old Republic is an important title for the company, it is getting an unfair amount of attention by analysts. In the quarter, he said the number of subscribers fell to 1.3 million from 1.7 million when the game launched.

“So while I understand there’s an enormous amount of interest, I don’t know that it warrants as much as what we’re seeing right now,” he said, according to a SeekingAlpha transcript.

The final highlight from the call was when Riccitiello questioned how much Zynga paid for OMGPOP and its hit title Draw Something, which was No. 1 for a short period of time. He didn’t actually name the two companies, but it was implied.

“Right now, what I’m starting to see is valuation expectations that assume that these things are all hockey stick moving up and to the right with no end in sight, and I think those are bad assumptions,” he said. “Some of them will work, some of them won’t, but they can’t all be worth the multiple that I’m seeing in the market right now.”

Yesterday, Nintendo reported an annual loss — its first in more than three decades — after revenues fell 36 percent. Hours later, five-year-old upstart Zynga reported nearly the opposite results, saying that first-quarter revenues jumped 32 percent year over year.

“Social, accessible and free are changing things,” said Zynga’s COO John Schappert in an interview. “We were built for this market; we live on free and in-app purchases. We never grew up on $60 games and consoles. It’s a different world, and it’s hard for some companies as they make the transition.”

For more than a year, the game industry has worried about the shift toward social and mobile from more traditional platforms like the home console. And now, after yesterday’s two drastically different financial reports, there is more than anecdotal evidence for concern.

Zynga continues to gain momentum and attract larger audiences with titles like FarmVille and CastleVille on Facebook and Words With Friends on mobile. On the flipside, Nintendo is facing yet another hardware cycle, with consumers waiting for its newest console, the Wii U, coming later this year.

Generally, experts believe that social and mobile games are expanding the overall games market. But yesterday it was hard not to see Nintendo’s first loss in three decades — totaling $531.1 million — as a hint of where things are headed.

Michael Pachter, an analyst with Wedbush Securities, is bullish on Zynga’s prospects but is not optimistic about the future of console games.

“Nintendo is living in the past, repeating what got them to where they are, and hoping that the recent downturn is a fad,” he said. “They aren’t adapting to the times, and it’s hurting them.”

To be fair, the companies approach the market completely differently, so it’s hard to compare the two.

Nintendo sells proprietary portable and home gaming units as well as the games that work on top of them. Meanwhile, Zynga gives away its games for free and lets them work across most computers and mobile phones. It makes money on advertising and microtransactions.

The two approaches lead to drastically different audience sizes.

Zynga said the number of monthly active users playing its games increased to 292 million in the first quarter, up 24 percent. The game company, which got its start on Facebook, is also expanding rapidly to mobile, reporting that it had 22 million monthly users on mobile, up from only 12 million one quarter ago.

Nintendo does not break out quarterly figures, but the number of new customers it reached during its fiscal year pales in comparison. Over the past year, it sold 13.53 million 3DS units, and expects to sell 18.5 million this year. Nintendo sold 9.84 million Wiis over the past year, down 35 percent.

This year, Nintendo is banking on the Wii U to revive the company and to better position itself against mobile devices like the iPad. The new console will come with a 6.2-inch touchscreen that will allow users to interact in a new way with games on TV screens. It plans to sell 10.5 million Wii units this year, including the Wii U.

Last year, Nintendo Global President Satoru Iwata told AllThingsD in an interview that he is not willing to gamble on free-to-play games, because consumers are willing to pay for Nintendo’s superior experiences and brands.

“If we were simply going to say okay, the only the way we could sell more products is by decreasing the price, then there wouldn’t be a bright future, and the entire industry will fold,” he said.

His point is not entirely lost.

Zynga makes far less money per user than Nintendo. In fact, the gap between them is enormous.

Each console or portable game unit Nintendo sells has the opportunity to generate hundreds of dollars in income, since console games cost $60 and portable games cost around $40 (not to mention the initial cost of the hardware).

Meanwhile, Zynga makes very little on each player. It reports a metric called average daily bookings per average daily active users (ABPU). Yesterday, Zynga said ABPU increased to $0.055 in the first quarter from $0.051 in the same period a year earlier.

For Nintendo to switch from one model to the other would be like giving up the farm.

And to be entirely fair, Zynga wasn’t profitable, either. In the first quarter it lost $85 million, primarily due to stock-based compensation.

While competing with online social games and less-expensive titles on smartphones and tablet computers, Nintendo also is revamping its portable and home machines to keep pace with Sony Corp. and Microsoft Corp. Nintendo plans to debut a new home console, the Wii U, this year.

Read the rest of this post on the original site »

That said, Google’s early head start over at Google Maps is pretty good. Click on “Quest” to get going. Or you can watch this video, which spells out the joke:

If you’ve got time, poke around particular landmarks, like Google HQ, and you’ll find some Easter eggs. Some of you should be able to figure out where I found this one pretty quickly:

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.

The 3DS’s sales — $1.2 billion including software — mark an important milestone for the company and its dual-screen portable 3D-game system, which had a bumpy start in the first half of its initial year of sales.

Read the rest of this post on the original site »

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)

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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.

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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.