It’s a path the company has trotted down several times in the past — in its MSN business, for instance — usually to eventually retreat.

Microsoft now has a 125-person studio in Santa Monica devoted to making content for the Xbox.

“We’re certainly looking at a very robust production schedule,” Microsoft entertainment and digital media president Nancy Tellem said in an interview at D: Dive Into Media. Tellem declined to outline a budget for the effort she is overseeing at Microsoft, but said the company is looking at a range of scripted interactive content.

Pressed by interviewer Peter Kafka on why Microsoft needs to make content versus just partnering with studios, Tellem — formerly president of the CBS Network Television Entertainment Group — said that Microsoft has a unique opportunity to make content that is interactive rather than linear.

“Particularly when you are looking at the younger demographic,” Tellem said, “interactivity is a natural extension of what they do.”

The content could be 10 minutes or an hour and a half, Tellem said.

Microsoft-created content is likely to be part of the company’s existing paid Xbox Live subscription service.

So, when are we going to see this content?, Kafka asked.

“It’s a good question,” Tellem said.

This year?

“I’m hoping,” she said.

This abbreviated history of human-computer interaction follows a clear trajectory of improvement, where each mode of communication with technology is demonstrably easier to use than the last. We are now entering an era of natural computing, where our interaction with technology becomes more like a conversation, effortless and ordinary, and less like a chore, clunky and difficult. Those of us working in the field are focused on teaching computers to understand and adapt to the most natural human actions, instead of forcing people to learn to understand and adapt to technology.

Three years ago, the industry’s only point of reference to explain this technology was science fiction, like the movie “Minority Report.” Then in November 2010, Microsoft’s Kinect for Xbox 360 sensor was released, and broad adoption of voice and gesture technology found its way into millions of living rooms. A year later, Microsoft launched Kinect for Windows, which gives researchers and businesses the ability to take the Kinect natural computing technology to market in a variety of industries.

Since then, major investments in the field have been made by established companies like Intel and Samsung, maturing natural user interface (NUI) players like Primesense and SoftKinetic, and new entrants like Leap Motion and Tobii. Natural computing is moving from the realms of researchers to the minds of marketers, and a true commercial category is starting to emerge.

But even just a year ago, there was no definition, no language and no data for the commercial category. Clearly a richer, more informed language was needed. To this end, my colleagues and I have developed a category framework: Kinect and other voice and gesture technologies are part of the Natural Computing category, defined as input devices that enable users to trigger computing events in the easiest, most efficient way possible. Understanding that the term Natural Computing has a variety of different meanings in academia, we found it was a helpful term to describe the business side of human-computer interaction technologies.

In some respects, there is evidence of natural computing all around us, and there has been for many years. Think of automatic doorways, which open up for you with no effort required on your part beyond walking toward them. Think of automatic faucets, soap dispensers and hand driers — all you have to do is offer them your hand.

These systems are the most rudimentary forms of natural computing. They each recognize a single set of data (your hand placement), automatically interpret your intent (to wash or dry your hands) and immediately respond to it (by dispensing water or soap or air). Now imagine if more complicated forms of technology could understand your intent in all its complexity, and respond to it simply, immediately and perfectly. No learning required. This is how those of us working in this field see the future.

There are currently a limited set of ways that users can interact with computing devices, although there will certainly be more in the future. Today, these include everything from manipulating a mouse and keyboard, to touching, speaking and gesturing. The illustration below breaks down these methods according to how close the user is to the screen (“far” vs. “near”), and how hard or easy it is to learn the technology (“learned” vs. “natural”).

First, each input method is designed to solve for different distances. For example, you need to be right next to a screen to be able to touch it, yet you can be several feet or more away from it when using gesture technologies. Similarly, take into consideration how much time it takes someone to learn how to use the technology. Older technologies tend to take longer to learn (think typing lessons or early command line interfaces) while newer ones tend to take less time (think touchscreens). The combination of these two ideas — proximity and ease of use — make up the Natural Computing Category Map, which enables us to better envision where certain natural computing technologies play a role now and where they could grow in the future.

Figure 1. Natural Computing Category Map (Illustrative)

Within this new, rising category, the technology receives new information with every single gesture, move or sound, and can adapt to what it learns. After one year in market, my colleagues and I continue to see Kinect for Windows as a fundamentally human technology — one that sees and recognizes users as a whole person, with thousands of examples of human-centered applications beyond gaming in industries like healthcare, retail, training and automotive. Additionally, competitive activity has also accelerated, with new sensor and SDK releases, updates to more established open source offerings and significant partnership and investment activity by major players and new entrants alike.

These other gesture-based technology companies have evolved to form partnerships with major computer hardware manufacturers or are exploring the possibilities of integrating the technology in smartphones. The category is growing and evolving rapidly. All this activity accretes to businesses and consumers, who benefit from the quickly evolving natural computing experiences.

The future of the natural computing category is to reach end-users directly, fundamentally changing everyday interactions with technology. Imagine walking by a storefront window and having an avatar mirror your every move, talking to your next-gen TV with the same tone and sentence structure you would use with a friend, or improving your tennis swing with an immersive simulation tool. If you are reading this and wonder what the future of natural computing holds in store for you, the future of natural computer interaction is here already, albeit unevenly distributed. And natural computing is quickly beginning to demonstrate what a computer can do if you give it eyes, ears and the capacity to use them.

Leslie Feinzaig is the Senior Product Manager for Kinect for Windows. Leslie plays an important role in Microsoft’s Kinect for Windows business and has researched and developed great insights into the industry and competitive landscapes around natural computing.

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.

Redmond is facing all sorts of challenges, but its Xbox is a clear success, not only as a gaming console, but as an Internet-connected entertainment device, which gives users access to video services like Netflx and HBO Go, and, increasingly, cable programming from the likes of ESPN. Microsoft says Xbox users now spend more time consuming media than playing games.

Which is why we’re very excited to bring two key Xbox executives onstage next month at D: Dive into Media: Yusuf Mehdi, senior vice president of Microsoft’s Interactive Entertainment Business, and Nancy Tellem, the former CBS executive who is building a new production studio for the device.

Mehdi is the man running marketing, strategy and corporate development for Xbox, and he’s the guy who links the console up with all the studios, networks and publishers who are creating content for the device. Prior to this job, he oversaw Microsoft’s media presence on the Web.

Tellem, a veteran TV executive, is the former CBS president now tasked with creating new programming for the device. She’s building out a Hollywood presence for Steve Ballmer, and her hire last fall was Microsoft’s most aggressive move into the content business so far.

They’re joining a stellar lineup of speakers Feb. 11 and 12 at the Ritz-Carlton in Laguna Niguel, Calif. Here’s who we’ve told you about so far: Sony Entertainment CEO Michael Lynton, Hearst Magazines president David Carey, Google chief business officer Nikesh Arora, Facebook partnership vice president Dan Rose, HBO co-president Eric Kessler, Live Nation CEO Michael Rapino, CollegeHumor co-founder Ricky Van Veen, Vice Media co-founder Shane Smith, Intel media head Erik Huggers and Samsung media head David Eun, Netflix content chief Ted Sarandos (and guest), New Republic owner Chris Hughes, USA Today publisher Larry Kramer, and Dish Network founder Charlie Ergen.

And, yes, we’ll have yet more names to announce in the coming weeks. But if you want to see these folks in person, register now, and we’ll see you soon.

Four out of 10 Americans have connected their TV to the Internet, according to a new Forrester study. If you’re just talking about the whippersnappers in the 18-to-32 age bracket, the number shoots up to 6 in 10.

Forrester credits Microsoft’s Xbox 360 and Sony’s PS3 for most of that; it says 42 percent of connected TV watchers are hooked up via a game console.

If you’re an oldster like me — who remembers the days of rabbit ears, Pong and three broadcast networks — that number seems staggeringly high. And we can attach a few caveats below.

But it’s not the first time we’ve seen stats like these.

Earlier this fall NPD reported that TVs have become the most common screen for Web video-watching. And Netflix says the PS3 often generates more streams per day than PCs do.

So if you’re willing to say these reports are at least directionally correct, it’s a big deal, at least for Netflix, Hulu, YouTube and everyone else who has been waiting on this moment.

If you do want to pick at these numbers, there are a couple ways to do that. For starters, note that the Forrester poll asks people if they have “ever accessed” the Internet on a TV, which is different from regular use. And it’s possible that many gamers are simply counting playing with other gamers as an Internet connection.

Most important is that Forrester’s numbers come from an online survey. And, as Forrester notes in the footnotes to their research, “respondents who participate in online surveys generally have more experience with the Internet and feel more comfortable transacting online.”

In other words: You can probably knock these numbers down a bit if you want to talk about the entire U.S. population. But even then, there’s definitely something here. And maybe that’s old news to everyone but me.

But it turns out that people who want to watch Netflix on their TV end up using one device more than any other: Sony’s PS3.

Netflix announced today that the gaming console is its “largest TV-connected platform in terms of Netflix viewing.” And, via a press release, CEO Reed Hastings says that “this year, at times,” the PS3 was delivering more hours of video to subscribers than regular computers, “to become our No. 1 platform overall.”

Not earth-shaking news, but still interesting — particularly because Sony rival Microsoft has been much more vocal about its plans to use its Xbox 360 game machine as a home-video hub. And earlier this year, video ad company FreeWheel claimed that the Xbox 360 was getting more video traffic than any other single gadget, including Apple’s iOS devices and Google’s Android phones.

You may not be rioting at Walmart, but you’re probably still spending part of Black Friday talking about things you are buying, will buy or would like to buy.

Especially, if you’re on Twitter. Because we love to talk about Black Friday on Twitter.

And here’s a handy real-time — or close to real-time — chart that shows us exactly what kind of Black Friday stuff people are talking about on Twitter, sorted by different categories. The data comes directly from the Twitter “firehose” that generates 400 million comments a day, and it’s sorted by Mass Relevance, a company that makes its living sorting social media for brands and other clients.

Not surprising: Twitterers are talking about Apple more than any other electronics brand, by a long shot. A bit surprising: They are more interested in talking about the Xbox 360 than any other gadget.

And when it comes to toys, it’s Lego, then Barbies, and then everything else is so far behind it barely registers (click chart to enlarge).

You can see a live version of the chart here, along with other goodies like a stream of Twitter, Instagram and Facebook pics, and breakout charts that compare things like the volume of tweets about iPhone 5s to tweets about Galaxy SIIIs — the iPhone is currently winning that one by a 4:1 ratio.

It’s sponsored by Starcom MediaVest, the big media planning/buying company owned by Publicis. Lisa Weinstein, who heads up digital for Starcom, said her agency is paying for it in order to help convince clients that getting people “engaged” on the Web — as opposed to just seeing banner ads — has “lower-funnel implications for brands” — that is, it can help convince people to buy stuff.

Next trick: Proving that this chatter actually does result in sales.

Activision just confirmed that its big first-person shooter of the year has racked up $500 million in sales on opening day, setting a new record for the Santa Monica, Calif.-based game publisher.

That easily outguns first-day sales of Halo 4, which Microsoft said on Monday totaled $220 million. Activision’s war-themed title also easily beats last year’s blockbuster release, Call of Duty: Modern Warfare 3, which achieved $400 million in sales within 24 hours, and about $1 billion after 16 days.

These big videogame titles are often compared to more general entertainment releases, like first-day sales at the box office, given their size and scope. The criticism of using that metric is that one game costs $60 versus the $11-or-so that it costs to go see the new “Twilight” flick. However, the counterargument is that a $60 game is much more of a commitment, and will take even the most savvy players weeks to finish, whereas a movie is snack-sized at only two hours.

Here’s Activision Blizzard’s CEO Bobby Kotick drawing the obvious Hollywood comparison:

“With first day sales of over half a billion dollars worldwide, we believe Call of Duty is the biggest entertainment launch of the year for the fourth year in a row,” Kotick said. “Life-to-date sales for the Call of Duty franchise have exceeded worldwide theatrical box office receipts for “Harry Potter” and “Star Wars,” the two most successful movie franchises of all time.”

On Monday, Microsoft claimed that Halo 4 beat box office releases like “Harry Potter and the Deathly Hallows: Part 2” and the “The Avengers” — based on day-one sales in the U.S. Halo 4 is sold exclusively on Microsoft’s Xbox, whereas Activision’s Call of Duty sells across the Xbox, PlayStation 3 and, two days from now, Nintendo’s Wii U.

Metacritic, which aggregates videogame reviews from various game publications, gave Microsoft’s Halo 4 an impressively high score of 91, based on 37 reviews, compared to Call of Duty: Black Ops II, which received an 84, based on 48 scores.

On Nov. 18, Nintendo will start selling the Wii U, marking the beginning of the next generation of videogaming hardware. Nintendo has not said how many Wii U’s it expects to sell, but it is forecasting 10 million units combined for both the original Wii and the Wii U this year. Already, retailers have sold out of the limited quantities made available for preorders, but more will be available on launch day.

In an interview with AllThingsD, Nintendo North American President Reggie Fils-Aime said, “We are looking to max out production as quickly as possible.”

Meanwhile, Microsoft said it sold 270,000 Xbox units in the month of October; that’s more than any other console. Based on data from the NPD Group, it says it continues to hold a 56 percent market share of the current generation of consoles in the U.S., including the original Wii U and the Playstation 3.

What’s more, NPD Group said that $315 million was spent on Xbox 360 products in October, or more than the other two current-generation consoles combined.

Nintendo will be the only one of the three to unveil new hardware in time for the holiday shopping season, and has priced the console fairly competitively. The new Wii U will cost between $300 and $350, depending on the package. At the same time, it is dropping the price of the original Wii to $130. The selling points of the new console are a controller with a touchscreen display, 3-D graphics and integration with live TV programming.

In lockstep with Nintendo’s launch, Microsoft has started experimenting with several different pricing models for its hardware, which is now more than six years old. On Oct. 28, it started selling different hardware configurations from $99 to $150 with a two-year Xbox Live commitment of $15 a month. The Live account is required to access many additional features on the console. In contrast, Nintendo does not have a subscription pricing model and only requires the upfront purchase.

The partnership between American Express and Microsoft is similar to other deals the credit card company has made over the past year or so. For example, American Express holders can link their account to their Foursquare, Twitter or Facebook accounts to unlock offers. But this marks the first time American Express has entered the interactive TV space.

Leslie Berland, the SVP of digital partnerships and development at American Express, said the company wants to be visible on the platforms that its customers are using today, “which we know gets them more engaged in the card and more loyal to us.” She said it also allows American Express to be considered a digital marketing platform for its merchant partners.

Once a cardholder links his or her account to Xbox Live, the partnership will work in two ways:

• An American Express page on the Xbox Live dashboard will allow consumers to pick offers and load them directly onto their credit cards, enabling them to redeem them later without taking any further action. The savings will automatically appear on the next statement.
• American Express also will connect offers to the actual games, starting with the highly anticipated Halo 4 release. Once players hit certain achievements in the game, they will be eligible to win various prizes, including a trip to E3, the annual video game trade show.

The first marketing partners to sign up include AMC Theaters, PacSun and Best Buy in the U.S. and Carphone Warehouse, Cineworld Cinemas, Dixons Travel and Topman in the U.K. Berland said they will continue adding sponsorships and rewards to the platform and will evaluate branching out to other interactive TV and gaming platforms.

Xbox marks a good first move, given that it has been the top-selling game console for several months running now. Likewise, Microsoft has been working on ways to integrate more ads within Xbox Live, which reaches roughly 40 million users. These people tend to be hard to reach elsewhere, given that the most dedicated users spend about three hours a day, an average of 84 hours a month, on the platform.

Maybe now, through deals like the ones from American Express, all that time spent on the platform will start paying off.

That makes the device intensely interesting to all sorts of media and marketing companies, who figure it’s a good place to reach lots of Halo-playing dudes.

And, according to L’Oreal, it’s a pretty good way to find women, too.

Really? Really. The cosmetics giant is launching an app for the Xbox 360 Platform, where users can get fashion tips, watch video tutorials and buy product. Conde Nast’s Lucky magazine will help build out some of the content, which will be updated regularly and will run for at least a year.

Nothing unusual here, except for the platform: “The Next Level” is the only “female-centric” app to launch on the Xbox so far.

It shouldn’t have been the first, says Jacqueline Corbelli. She runs BrightLine, the interactive marketing shop that built the app for L’Oreal. She says Microsoft’s data says that, in the U.S., a full 40 percent of its 20 million Xbox Live users are female.

“I’ve known it for a little while, but I was surprised when I first saw it, too,” Corbelli says.

If BrightLine and L’Oreal are right, then look for a flood of imitators.

Getting Web video off your PC and onto your plasma screen used to be a niche activity. No more: Consumer-tracking service NPD says TV sets are now the most popular way to watch streaming video.

NPD says 45 percent of consumers report that TV is now their primary Web video screen, up from 33 percent last year. It basically swapped places with the PC, which used to account for 48 percent of viewing but now represents 31 percent.*

This is a story about devices: NPD figures that 10 percent of homes now have at least one Internet-enabled TV (though I bet that only a minority of them are actually plugged into the Web), and we’re seeing a steady increase in the use of Web-video peripherals, like Blu-ray players, Apple TVs and Microsoft Xbox 360s.

And it’s also about content: NPD says the most popular service for viewing Web content on TV is Netflix, with 40 percent of connected TV watchers using the service.

Here’s NPD’s general screen breakdown by device. Curious that “mobile” doesn’t show up as a category; then again, maybe mobile is always a third choice compared to bigger screens. Also odd that the iPad and other tablets don’t break 1 percent.

And here’s NPD’s summary of how Web-to-TV viewers get their stuff on the big screen:

Percentage of device owners that use the device to acquire online content (video, music, games)

• 43 percent connected TVs
• 47 percent VG consoles (Wii, Xbox 360, PS3)
• 62 percent streaming media players (Roku, Boxee, Apple TV)
• 38 percent computers with direct wired connection to TV
• 21 percent of BD players

* I’m assuming that mobile accounts for most everything else, but am waiting for confirmation. Update: Nope! See above.

The huge first day marked the best start ever for the franchise on this generation of hardware, with sales up 7 percent compared to last year. EA said the franchise also set a day-one online record, with a 28 percent jump in the number of users logging in to play simultaneously.

At launch, the game was available in North America for four systems: Xbox 360, Nintendo Wii, PlayStation Vita and PlayStation 3, for $40 to $60.

Critics are raving about the new technical innovations that allow tackles and other movements to look more realistic — and more painful. The game received high rankings on Metacritic.com, including a score of 82 out of 100 on the Xbox and a score of 85 on the PlayStation 3.

Of course, the hilarious YouTube videos that EA is using to market the game probably helped, too. The clips feature Paul Rudd, perhaps better known as the brother-in-law from “Knocked Up,” and Ray Lewis, the 240-pound linebacker for the Baltimore Ravens, pretending to be best friends and poking fun at each other while playing Madden.

Those viral efforts among others probably helped to generate the estimated 665,464 social interactions on Facebook and Twitter combined during the launch.

For kicks and tackles, here’s the video of Rudd dancing to Wiz Khalifa’s “Black and Yellow” in Lewis’s face to honor the Ravens’ big rival, the Steelers.

And here’s the simple reason why: Despite all the new categories being built over the past two years — like social and phone and tablet gaming — consumers are still spending less than they used to on videogames.

Anita Frazier at the NPD Group said the gains that digital gaming formats are realizing were not quite enough to offset a 16 percent drop in consumer spending during the second quarter.

Right now, the industry is close to a break-even point, with half of its sales coming from digital and half coming from software. It’s just enough to make the argument that companies should be investing in digital, but basically not enough for them to be rewarded for it, especially with standalone entities like Zynga eating up most of the profits in one category.

In the second quarter, $1.39 billion was spent by U.S. consumers on videogame software for consoles and PCs, including new, rental and used sales. In the other category, which includes digital downloads, subscriptions, mobile and social, sales in the second quarter totaled $1.47 billion, NPD Group said.

In June, those trends continued, with consumers spending a total of $1.1 billion, of which $439 million came from digital sales.

Based on how history tells it, the industry is fueled by cycles, with new hardware resulting in a jump in software sales. But the current generation of consoles are hitting their seventh year, which means that consumers have started to get tired of their ancient systems, and have started to slow their spending. Only one console maker, Nintendo, has plans to launch new hardware — the Wii U — in time for Christmas.

After two straight weeks of earnings reports, this trend is obvious.

Last week, Take-Two Interactive disappointed analysts with a wider than expected loss, Activision was down compared to the prior year, Electronic Arts’ results showed signs of weakness, and the week before, Zynga shocked investors after wildly missing expectations.

Frazier said in July that there was only one hardware platform that experienced an increase in sales compared to last year: Nintendo’s portable game unit, the 3DS. This month, we can look forward to a potential lift from the release of Nintendo’s 3DS XL, which boasts a bigger screen.

Otherwise, it’s Microsoft’s Xbox that is sweeping up the remnants in the space. But increasingly, the console is being used to stream video and other content to users’ TVs — not to play games.

Microsoft said that, based on the NPD results, it sold 203,000 units in July, which was more units than any gaming hardware. It currently holds 49 percent market share of current-generation consoles, and total spending on platform in July (including hardware, software and accessories) reached $218 million. At that rate, consumers spent more on Xbox 360 products in July than they spent on the Nintendo Wii and the Sony PlayStation 3 combined.