Photo courtesy NeuroGaming Conference & Expo

In San Francisco this week, a nonprofit group dedicated to neurogaming — the intersection of brain science and videogame playing — is taking its turn at bat in predicting the next wave of game-changing technology.

The conclusion of the NeuroGaming Conference and Expo’s organizers, unsurprisingly, is that hardware and software that monitor and respond to your body’s electrical and chemical signals will do for games what synchronized sound did for movies. Zack Lynch, CEO of the neurotech industry’s trade group, said the end goal is to create a new, deeper category of games.

Speakers and expositioners all had their own takes on how to reach that goal, including (just to name a few):

• “Mind-reading” headsets with sensors that attach to the ear and forehead
• Smooth, unassuming touchscreens that provide haptic (touch) feedback
• Headphones that convert low-frequency bass sounds — think explosions in an action game — into physical vibrations
• Neurotech integrations with much-discussed emerging wearable technologies like Google Glass and the Oculus Rift
• Experimental sensors that could estimate a player’s emotional state by, for instance, calculating the pH of their sweat.

But questions about the technology’s future abounded throughout the first day of the conference on Wednesday. At the root of all their caveats was a single point of potential failure: those pesky consumers.

“Most consumers are not going to put down their hard-earned money” for experimental one-time-use gadgets, NeuroSky CEO Stanley Yang said. “There has to be lasting value.”

(Yang should know: his company’s first consumer product, the Star Wars Force Trainer, was a $130 ping pong ball-levitating device … batteries not included.)

Photo courtesy NeuroGaming Conference & Expo

“Regardless of how we define it, keep the consumers in mind,” Petrovic said in a venture capital-focused panel about investing in the technology. “Don’t call this ‘the next great neurogaming platform’ or ‘neurogaming device,’ because it won’t sell.”

Those terms, he explained, connote an invasion of one’s body and may seem scary to those unfamiliar with the technology — that is, almost everyone.

A few of the speakers and numerous attendees (Lynch said about 300 registered for the conference online) suggested that the best immediate hope for brain-powered technology is not consumer gaming at all, but rather improvements in the places where it has already succeeded, like clinical therapy for those with limited mobility or as a teaching aide for children with mental disorders like ADHD.

The problem is that most brain-training games are just, well, boring, said Petrovic’s fellow panelist Roger Quy, a general partner at Technology Partners. A popular refrain throughout the day was that without great content, all attempts at neurogaming would be doomed to the same fate as 3-D TV, which fizzled despite enormous hype and investment.

Union Square associate Nate Hennings added that games targeted at a niche of enthusiasts may prove to be a testing ground for the mass viability of neurotech, just as the Tesla Roadster laid the groundwork for cheaper versions of the electric cars.

The dream, though, is that one of the companies represented at the conference will come up with a device that immediately “clicks” with consumers, as the Wiimote did starting back in 2006. To that end, perhaps the most important axiom to measure future brain gaming products’ success came out of Yang’s appearance earlier in the day.

“What happens to the consumer when they open up the box?” Yang asked. “Are they able to plug it in and start having fun instantly? If you can’t deliver that, nobody will jump in.”

AllThingsD will be there keeping an eye on two questions in particular: How is the business of mobile games changing, and how are the makers of consoles and other physical media responding to mobile’s ascendance?

This year’s conference also promises to at least touch on the growing relevance of women in the gaming community, and will also highlight the gap between small independent games studios and the larger legacy companies that are finding different degrees of success in staying relevant as their industry continues to expand and fracture.

If you only read one gaming statistic this week, let it be this one: In a pre-conference survey, GDC 2013’s organizers found that 58 percent of gaming professionals attending either last year’s conference or this one plan to release their next game on smartphones or tablets. That’s a tad greater than commitments to the Xbox 360, Microsoft’s next console, PlayStation 3, PlayStation 4, Wii U and Wii combined, which together garnered “next game” pledges from 56.5 percent of developers.

Nevertheless, interest in gaming hardware is still strong, particularly for established consoles and for the Android-based consoles Ouya and GameStick, both of which bested the next Xbox and the PlayStation 4 when those same survey respondents were asked what platforms most excited or interested them.

Stay tuned for more!

There’s no doubt about it’s strength in the U.S., but internationally, it’s not so clear how the seven-year old game console is faring, especially in comparison to Sony’s PlayStation. 

Microsoft sold 281,000 Xbox 360 units in January, up 4.1 percent from 270,000 a year ago, according to the NPD Group, which tracks sales of video-game software, hardware and accessories in the U.S. that occur at retail.

Earlier this week at D: Dive Into Media, Yusuf Mehdi, who leads Microsoft’s interactive entertainment business, also provided an update based on internal data.

He said the overall Xbox installed base is now at 76 million, up from 70 million at the end of September of last year. Also, 24 million Kinects have been sold, up from 20 million last year, and there are 46 million Xbox Live accounts, up from 40 million.

Sales continue to be brisk because the company has been successful at moving beyond a hard-core gaming audience to serve members of the family who like other forms of entertainment, such as streaming video or music.

But the rivalry between the different console makers is particularly intense right now as the industry waits for the next-generation devices to launch.

The Nintendo Wii U was the first to launch this holiday season, but has had a relatively lackluster performance. Next week, Sony is planning to unveil its new home videogame console at an event in New York. But Microsoft has remained mum on its plans for any potential Xbox 720. Earlier this week, Mehdi refused to budge on the subject. “I’ll politely decline any comment,” he said.

So, the question is, will Sony’s PlayStation 4 be well received?

If global trends are any indication, it’s possible. Based on numbers culled from the three company’s earnings reports, Geekwire was able to determine that the PlayStation 3 was the best-selling home console worldwide during the holidays.

Sales of the PS2 and PS3 totaled 6.8 million units for the December quarter to beat the number of Nintendo Wii and Wii U units sold (5.3 million), and the number of units reported by Microsoft for the Xbox 360 (5.9 million).

For the full year, the two PlayStation devices together sold 15.6 million units worldwide, compared with 8 million for Nintendo and about 11 million for the Xbox 360.

In other words, Sony continues to have a very strong worldwide presence for the PlayStation, compared to the Xbox which seems to dominate in the U.S.

Overall, however, the hardware sector remains fairly weak. Most executives in the videogame industry believe a new wave of hardware is needed to spur consumer interest again, while others believe that gamers are less attached to the living room than they were before and prefer gaming wherever they are from their phone or tablet.

NPD reported that sales of hardware in January were down 17 percent year over year when taking into account that the month had five weeks instead of four.

Responding to consumer requests, Nintendo will provide two significant system updates that will help speed up the time it takes to launch software and return to the Wii U menu. The updates will be delivered in two stages: One in spring, and the next in summer.

Shortly after the spring update, Nintendo will launch a Virtual Console for the Wii U that will allow users to play classic Nintendo Entertainment System (NES) and Super NES games.

Only a select number of NES and Super NES games will be available at first. Iwata said the games are being rewritten for the Wii U system, so it’s not possible to offer the entire collection at launch. Eventually, the game selection will include Game Boy Advance titles, and users will be able to save game progress and play right on the Wii U GamePad.

NES games will cost between $4.99 and $5.99, while Super NES games will fall in the $7.99 to $8.99 range. Discounted rates ($1 for NES titles and $1.50 for Super NES games) will be available for those who already purchased the Wii versions of the Virtual Console games.

Nintendo will also offer one game for 30 cents each month through July to celebrate the launch the Virtual Console for Wii U and the 30th anniversary of Nintendo’s Family Computer. Games include Balloon Fight, Kirby’s Adventure, Super Metroid and Donkey Kong.

As for new games for the Wii U, Iwata revealed that an HD remake of The Legend of Zelda: The Wind Waker is scheduled for this fall, along with a new Zelda game. A 3-D Mario and a Mario Kart racing game are also on tap, with more details coming at the E3 trade show in June. Other games on the schedule include one centering on the Yoshi character, Wii Party and a role-playing game from Monolith Soft.

In his presentation, Iwata apologized for the absence of any new Wii U titles for the months of January and February, but said that offering high-quality games was more important.

“Nintendo takes seriously its responsibility to offer a steady stream of new titles in the very early days of a new platform to establish a good lineup of software,” Iwata said. “On the other hand, we also firmly believe we have to offer quality experiences when we release new titles. Based on our software development schedules at the end of last year, we concluded we should spend a little more time to satisfy to our Nintendo standard of quality.”

The Nintendo Wii U launched in November, and the company has sold more than 890,000 units, according to NPD. Despite this, older competing consoles like Microsoft’s Xbox and Sony’s PlayStation are still doing well, so game selection will be key for Nintendo.

Here’s its latest attempt to break through: Disney Infinity, a series of games aimed at console game players.

That is: People who play games on Microsoft’s Xbox 360, Sony’s PS3 and the Nintendo Wii.

Short version: Infinity is a series of games linked together via a virtual “toy box,” so players can swap and modify characters from one game and bring them into another. Which means Sully from “Monsters University” can jump into a “Pirates of the Caribbean” game, etc.

The games also incorporate real-world collectible toys, which players use to unlock characters, games, etc. And you can also buy “power up” packs and other modules to boost/alter your games.

Or, for those of you who know kids of a certain age: This is a lot like Skylanders, except with Disney/Pixar characters that you can mash up. For the rest of you: Skylanders is a super-successful franchise from Activision that has generated $500 million in retail sales in a couple years.

That last sentence helps clarify what Disney is trying to do here. But if you’re wondering why Disney is focused on big, expensive (a “starter pack” for Infinity, which includes three games, will go for $75) console games, when the big trend in gaming is toward cheap/free casual/mobile games like Angry Birds, then Disney gaming chief John Pleasants wants to reassure you: They’re not.

“We’ve been fairly clear in our communications with folks that we have made a fairly big shift into online, mobile and social,” he says. And Infinity won’t change that.

But since people are still spending an awful lot of time on console games — and Sony et al are prepping the next generation of those machines — there’s no reason to abandon the market.

Nintendo’s Wii U has managed to outperform the launch of its original Wii, at least in terms of revenue, but only because it costs more.

In the U.S., Nintendo sold 460,000 Wii U devices in December and more than 890,000 since it launched in mid-November, according to NPD, which tracks monthly sales figures for the videogame industry.

As a result, Nintendo said it recorded $300 million in revenue, which is more than the $270 million that the original Wii made at the same point in its life cycle.

But the original Wii, which launched in 2006, cost only $250, and today’s Wii U is setting players back between $300 and $350 apiece. So, the only reason it was able to exceed prior sales is because it upped the price — not because it sold more units.

That didn’t stop Nintendo of America’s EVP of Sales & Marketing Scott Moffitt from singing the company’s praises: “While the Wii launch established new benchmarks in the United States, Wii U has surpassed its predecessor in perhaps the most important category: revenue generation.”

Moffitt, however, did not comment on profits.

The Wii U has two editions: The deluxe offering that costs $350 and the basic offering for $300. The deluxe edition sold out at retail this holiday, and both editions were difficult to find after the Nov. 18 launch. But it was nothing like the launch of the Wii, which experienced shortages for months. Nintendo did run into a few hiccups at launch with customers experiencing long waits for mandatory software updates. Additionally, some of the device’s most notable features, like its TVii service, did not launch until later in the month.

Microsoft also reported strong revenue for the Xbox. The company holds the envious position of having the top-selling piece of hardware for the past 17 months straight. It sold 1.4 million units in December, or three times the number of Wii U’s sold. (When you add up all the hardware Nintendo sold, it totals more than 2.65 million units).

In all, Microsoft said, consumers spent more than $1.27 billion on the Xbox 360, including games, consoles and accessories.

Following the release of the NPD data, Sony did not immediately break out the PlayStation’s performance for the month of December.

Even so, the numbers are staggering, especially given the amount of pressure that smartphones and tablets are putting on the game console industry. But some impact can be seen. The amount of money being generated by mobile games and online gaming still has not been enough to offset the declines that the traditional console gaming market is seeing — at least that’s NPD Group’s position.

Historically, the research firm has monitored sales through purchases made at physical retail locations. In recent years, it has expanded its methodologies as more content is sold digitally over services like Valve’s Steam on the PC or as expansion packs inside of console games.

Overall, it reported for December that new physical retail sales of hardware, software and accessories totaled $3.2 billion, falling 22 percent year over year. It calculates that the physical channel accounts for nearly 50 percent of the total consumer spend on games.

When NPD considers revenue from other channels, such as used and rentals, and digital formats, like full games, micro-transactions, mobile apps and social gaming, its preliminary estimate is that consumer spending in December hit $4.1 billion in all. A final analysis of non-physical spending however, is expected to be released in February.

The research firm, which tracks spending at physical retail stores on a monthly basis, said last month was a particularly strong period for both hardware and software sales. In November, videogame sales totaled $2.6 billion, down 11 percent from the year-ago period, when sales totaled $2.9 billion — the smallest year-over-year decline so far in 2012.

There are two trends that are contributing to the drop off: One has to do with consumers shifting to other platforms, such as tablets and mobile phones, but the other has to do with how NPD tracks its data. It records sales that occur at retail, whereas a lot of consumers have started to purchase games digitally over the Internet. Still, looking at NPD’s data provides a broad picture of trends in the game industry.

Most telling last month was that sales have continued to be strong despite the fact that most of the hardware is six to seven years old, with the exception of Nintendo’s Wii U.

For comparison’s sake, NPD looked at how sales did last month compared to November 2005, which was the last time the industry began to transition between console generations. NPD Group Analyst Liam Callahan said retail game sales are nearly double what they were in November 2005. “This really demonstrates the long-term health of retail sales even as many platforms are quite late in their life cycles,” he said.

In addition, he said last month’s figures provide a very good sign of momentum going into the December holiday period.

Here are some of the findings from NPD’s November report, which tracked spending between Oct. 28 and Nov. 24:

• Nintendo sold more than 1.75 million total hardware units, including nearly 910,000 portable game units and more than 845,000 original Wii and Wii U units. In particular, it sold 425,000 Wii U units during the seven days captured in the data.
• Microsoft sold a jaw-dropping 1.26 million Xbox 360 units during the month, making it the No. 1 console maker for the 23rd consecutive month.
• November was the second-highest month of sales on a unit basis for the PS Vita since it launched, fueled by bundling third-party content with the hardware.
• Videogame software sales, including console and portable, totaled $1.43 billion, down 8 percent from the year ago period, when it totaled $1.6 billion. That represented the smallest unit decline this year, tied with August.
• Half of the software sales in November were for the Xbox 360, which gained 8 percentage points in market share since last November.
• Not surprising, Activision’s Call of Duty: Modern Warfare 3 Black Ops 2 was the top selling game during the month. It reported yesterday that it hit $1 billion in sales in just 15 days.

In a blog post, Larry Hryb — a Microsoft spokesperson who blogs under his gamer tag, Major Nelson — reported that the Xbox 360 sold more than 750,000 consoles in the U.S. last week, easily beating Wii U first-week sales of 400,000. What’s more, it exceeds the 700,000 units Nintendo sold of the Wii U and the original Wii combined.

In some ways, however, the two numbers are not really comparable.

The Wii U, which launched last Sunday, costs between $300 and $350, and Microsoft is selling the Xbox for a number of configurations starting at half that price. Additionally, sales of the Wii U were limited by the number of units Nintendo could manufacturer, with many retailers reporting that inventory was sold out.

Microsoft said that the 750,000 consoles it sold between Sunday, Nov. 18 (when the Wii U launched) and Black Friday exceeded its internal forecasts. At that rate, the numbers are absolutely staggering, especially given the amount of pressure that phones and tablets are putting on the TV consoles as alternative gaming devices. Last month, Microsoft sold 270,000 Xbox units, making it the best-selling console in the U.S. at the time.

But access to streaming media and other entertainment is helping to drive sales of the older hardware. As Major Nelson pointed out today, Microsoft’s three-month Xbox Live Gold Subscription sales increased more than 50 percent, compared to the same week last year. On Sunday, its Xbox Live services — which include streaming video and multiplayer game play — were used by more than 14 million people, racking up more than 72 million hours worldwide. Compared to 2011, Microsoft has seen a 43 percent increase in U.S. hours logged on Xbox Live during the week of Black Friday.

I asked Sony for its sales figures for the past week, but the company has not responded to the request.

The new Nintendo Wii Mini will be available exclusively in Canada, starting Dec. 7. Priced at $100, it is aimed at first-time buyers who want to “jump in and experience” Wii games.

Unlike the original Wii, the Mini doesn’t have Internet capabilities and is not compatible with GameCube games. But the company says it can play more than 1,400 disc-based games, such as New Super Mario Bros. and Wii Fit Plus, and is compatible with most Wii accessories.

The system ships with a Wii Remote Plus and a nunchuck controller, and comes in a matte-black-and-red design.

It’s curious that the company chose to launch the system only in Canada. Nintendo said it had no additional information about bringing the device to other regions in the future.

While a cheaper, smaller system is great in theory, the original Wii costs just $30 more ($20 at some retailers, including Best Buy) and includes Wii Sports and Wii Sports Resort, so you’re getting more bang for your buck there.

So far, Nintendo has had a strong start to its holiday season. Just yesterday, Nintendo of America said that it sold 400,000 Wii units during the console’s first week on sale in the U.S. Meanwhile, heavy discounts drove sales on older systems, amounting to a total of 1.2 million devices sold over the last week.

Still, it remains to be seen whether Nintendo can continue this momentum beyond the holiday season.

The Japanese game company hit the ground running, with many retailers reporting that the next-generation console was sold out just hours after going on sale on Nov. 18.

In comparison, Nintendo sold more consoles last week than Microsoft was able to sell in an entire month. In October, Microsoft sold 270,000 Xbox units, making it the best-selling console in the U.S. at the time.

Today, Nintendo confirmed in an interview with CNET that sales for all of its hardware have been brisk during the busy holiday week.

Update: In a statement provided by Nintendo of America, it said that in addition to selling 400,000 Wii U units, Nintendo sold 300,000 original Wii consoles, 250,000 3DS portable gaming devices, and 275,000 of the older DS devices. In all, Nintendo sold 1.2 million devices, driven by the new hardware and heavy discounts on older devices.

So far, consumers have been undeterred by reports that the Wii U was missing some key features at launch, and that a mandatory software patch would take more than an hour for customers to download.

Nintendo is selling two variations of its console, ranging from $300 to $350, depending on the features.

Despite a strong start, it’s unclear how the console will perform over the long term. A report released by IHS Screen Digest earlier this month predicted that the Wii U would have a successful launch, but warned that maintaining momentum will be difficult.