U.S. video-game retail sales fell 26 percent last month, led by lower demand for consoles such as Microsoft Corp. (MSFT)’s Xbox 360, researcher NPD Group said. Retail-store sales of game hardware, software and accessories from all makers fell 26 percent to $707.7 million, the lowest level since October 2006, from $961.3 million a year earlier, Port Washington, New York-based NPD said in a statement yesterday. Hardware sales declined 29 percent, and software sales slipped 30 percent, the researcher said.

Microsoft, based in Redmond, Washington, posted a drop in sales of Xbox 360 for the first time since December 2009. Sales of the console, which was the top-selling video-game player in July, plunged 37.6 percent to 277,000 units.

“This is more of a reflection of robust sales last July, which was the biggest month for unit sales of the 360 in 2010 outside the holiday months November and December,” Anita Frazier, an analyst at NPD, said in the statement. Xbox sales in July last year were boosted after Microsoft cut prices to clear old models for a redesigned console.

Consumers are increasing their spending to buy content in other ways such as electronic purchases of full games, mobile games and social-network gaming, Frazier said. “We have measured some remarkable growth” in those areas, she said.

Sales of Sony Corp. (6758)’s motion-sensing Move peripheral for the PlayStation 3 rose 18 percent from a year earlier, the Tokyo-based company said in a statement, without citing figures or overall hardware sales.
Nintendo Co.’s sales of DS and 3DS handheld players were “about flat to last year,” NPD said, adding sales of all hardware platforms dropped last month. The Kyoto, Japan-based company cut prices of the 3DS by 32 percent to $169.99 in the U.S., starting today.

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Gamers in the UK who do not have access to an Xbox or PlayStation 3 will soon have a new alternative for playing games in their living room, when the cloud console system Onlive is released on 22nd September.
The system has already been available in the US for over a year, and is operated via a tablet device or home computer such as a PC or Mac.

There is also a micro console that can be bought to play Onlive which can be plugged directly into an HD television . In essence, Onlive is a games console that is accessed from a central hub of servers (in Europe, this hub will be based in Luxembourg). A user logs into the server and can play the games on offer without the need to have their own specific games console.

Online gaming has been around for many years now, but this is the first real attempt to bring a cloud-based gaming service, akin to a console, to the UK market. Executive Editor of IGN, Scott Lowe, had mixed impressions of the system when reviewing it, noting that “there are some sacrifices” when playing. “You lose a little bit of the clarity and the graphics don’t stack up as well as something like a PC or a console,” he stated.

However, Mr Lowe did point out that gamers still got the “gist of the experience” and also pointed out that there was no time wasted installing software or having to download updates as the Onlive service is instantaneous.

One of the major issues of the online gaming is latency, or ‘lag’ as it is also known. Onlive games, however, have been specifically designed to avoid these issues and provide a pause and glitch-free gaming experience as much as possible.

Onlive hopes to strike deals with broadband providers to ensure that people who use their service do not exceed their monthly download limits quickly by playing their games online. A user playing a streaming game online would typically use 450MB an hour, and this would quickly use up all their available time online well before they reached the end of the month.

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Like his "First Blood" theme song says, it's been a long road for John Rambo: a novel, four movies, two Silver Stars, four Bronze Stars for Valor, four Purple Hearts, the Medal of Honor, even a soundtrack featuring the music of Frank Stallone (that must be what the Purple Hearts were for). But none of that compared to the horror of his appearances on video game consoles, particularly in one unforgettably terrible Nintendo game that sucked tens of dollars and hundreds of hours out of the lives of thousands of kids of my generation. I never had to go to Vietnam, thank God. But I had to play the "Rambo" game, which left its own brutal scars on my psyche.

Rambo's made scattered gaming appearances here or there in the years since, and just last spring I told you about his hilariously violent arcade light gun game that is truly a sight to behold. But he hasn't relived those dark days on home consoles in over twenty years.

That all changes in 2012, when publisher Reef Entertainment will bring a new Rambo video game to XBox, PS3, and PC. Here's CEO Peter Rezon, from an announcement on MCV:

Gritty atmosphere and full-on action are definite musts. So are Dan Hill's great theme song and authentic Sylvester Stallone grunts. The recent arcade shooter got the gameplay right since, just like in his movies, "Rambo" never ducks or dodges gunfire and barely moves or reloads. He just shoots and shoots and shoots and kills and kills and kills. Then, occasionally, he pauses for a light afternoon snack of blowing people up with explosive tip arrows. It's a robust experience.

A little bit more story would be nice. I can see Rambo being the perfect star of a less intelligent, more violent riff on "Uncharted"-style action. There shouldn't be too much story, though: just lots of jungle combat and vehicle chases, with some climbing and hand to hand combat. And, of course, borderline immoral amounts of gun violence.

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A CALL has been made to install time limits on gaming consoles such as Xbox and PlayStation in an effort to curtail the number of hours people spend on them. Fine Gael Senator Fidelma Healy Eames wants manufacturers to incorporate a maximum usage time following the death of a 20-year-old in England from deep vein thrombosis after spending 12-hour sessions playing Xbox.

Chris Staniforth from Sheffield, who his family say was addicted to Xbox and who was otherwise in good health, died in May. Senator Healy Eames, Fine Gael Seanad spokeswoman on social protection, said she will be contacting the National Consumer Agency and manufacturers in a bid to have the time limits installed. She said teenagers had become addicted to games and controls needed to be installed.

“It is only now that research on the addictive nature of these gaming consoles is beginning to emerge. What we need is quick action and I believe it is not unreasonable to demand some class of a microchip to be installed that shuts the game down after two hours, and that it cannot be restarted for another period of time,” she said.

“We are soon to be putting images on cigarette boxes to prevent smoking because of the impact on health and its addictive quality. This is not far behind in respect of lasting damage. “Thousands of our children, teens and even young married men are spending endless hours on these machines and it is impacting on their emotional and mental health also.”

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A CALL has been made to install time limits on gaming consoles such as Xbox and PlayStation in an effort to curtail the number of hours people spend on them. Fine Gael Senator Fidelma Healy Eames wants manufacturers to incorporate a maximum usage time following the death of a 20-year-old in England from deep vein thrombosis after spending 12-hour sessions playing Xbox.

Chris Staniforth from Sheffield, who his family say was addicted to Xbox and who was otherwise in good health, died in May. Senator Healy Eames, Fine Gael Seanad spokeswoman on social protection, said she will be contacting the National Consumer Agency and manufacturers in a bid to have the time limits installed. She said teenagers had become addicted to games and controls needed to be installed.

“It is only now that research on the addictive nature of these gaming consoles is beginning to emerge. What we need is quick action and I believe it is not unreasonable to demand some class of a microchip to be installed that shuts the game down after two hours, and that it cannot be restarted for another period of time,” she said.

“We are soon to be putting images on cigarette boxes to prevent smoking because of the impact on health and its addictive quality. This is not far behind in respect of lasting damage. “Thousands of our children, teens and even young married men are spending endless hours on these machines and it is impacting on their emotional and mental health also.”

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At least one game developer is wondering why console makers are even considering releasing next-generation hardware. Speaking to IndustryGamers in an interview published yesterday, Epic Games President Mike Capps said that Apple's iPhone should be enough to make console makers second-guess their desire to launch follow-up devices.

"If you look at the ridiculous acceleration of iPhone hardware and technology, trying to find a sweet spot for tech to make your mobile game... I mean, what would your mobile game look like in 2015?" Capps pondered in the interview with IndustryGamers. "Who knows how fast that's going to operate, but you can bet it's going to be faster than an Xbox 360."

Capps, whose company is best known for the Gears of War franchise, said that the industry will need to "deal with iPhone 8." That device, he says, "will probably plug into your TV, or better yet, wirelessly connect to your television set to give you that big screen gaming experience with good sound. "So really, what's the point of those next-gen consoles?" he continued.

Nintendo might disagree with that sentiment. At the E3 gaming expo earlier this year, the company unveiled the Wii U, the next installment in its long line of consoles. The device, which is scheduled to launch next year, is expected to offer better graphics than its predecessor and come with a controller featuring a 6.2-inch touch screen that lets users interact with on-screen content and continue gameplay on it while away from the console.

Recent reports suggest Sony and Microsoft are also considering launching new consoles in the coming years. Last month, AMD's director of ISV relationship management, Neal Robinson, told Official Xbox Magazine in an interview that the next Xbox will come "pretty darn close" to offering the graphical sophistication of 2009 blockbuster movie "Avatar." Robinson didn't say when that device might launch.
Earlier this year, however, game blog Kotaku reported that Microsoft and Sony were readying their next consoles for 2014. So far, neither company has confirmed that report. Capps isn't alone in believing that those launches might not make sense. Last year, Electronic Arts CFO Eric Brown said that there is simply no compelling reason for hardware makers to release new consoles anytime soon.

"Today we have two of the three consoles that operate in full high-definition and are running games at 60 frames per second," Brown said. "If you step back and say if it's a multibillion capital dollar investment for the next generation, the question I would ask is 'if you were to produce that then what would you display it on?' There's really nothing in terms of broadly available consumer viewing technology other than 1080p flat panel televisions. And so you could upgrade in theory, but you wouldn't get the obvious graphical benefit that we saw really drove the sharp transitions in the prior cycle."So what will happen next? It's tough to say. But given the industry's history, the Wii U will likely be followed up by new consoles from Microsoft and Sony--whether or not some developers think it's a smart move.

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Technology advancement is a path, rather than a destination. Unfortunately, the road is long, rocky and has no speed limit. Qualcomm demonstrated that this week when they showcased console quality games on smartphone hardware. Now, they don’t have a PC or game console business to protect, but they are in possession of graphics technology acquired from AMD/ATI.

The company evidently plans to use the tech to "obsolete" current-gen handheld console initially, and traditional game consoles eventually.

The first step part of the plan is already happening, but the second obviously depends on TV and set top box makers. Let’s explore this.

Qualcomm’s Gaming Group

I recently visited Qualcomm’s Gaming Group, where I toured one of the coolest demo areas ever - with the decor appearing to be a mix of Star Trek and Men in Black. The company was showcasing a series of technologies that allows them to provide gaming experiences in line with current-gen HD and future 3D titles on smartphone hardware.  

The primary weakness which I observed wasn’t in the visual presentation of the games (as off the shelf game engines were being used), but rather, in the controller hardware. Indeed, I could quickly see the reason for the Qualcomm-based Xperia Phone offered by Sony Ericsson.

Screen-based controllers are currently quite troublesome. This limitation will undoubtedly focus more companies on advancing  touch screen technology so they are capable of acting as optimized controllers. Fortunately for Qualcomm, the firm already boasts a next-gen, transflective technology known as Mirasol which provides an improved control surface, is extremely glare resistant and sips relatively low amounts of power

One of the more interesting demonstrations was a peer-to-peer gaming capability using Bluetooth that would, upon release, be both secure and easy to configure. As such, two people with phones could play the same game - which is ideal for most head-to-head titles, whether they are handheld or console based.

Basically, the future Qualcomm currently envisions is one where your phone acts as a primary gaming device by scaling from a small to large screen as needed.

Alternative Path

Interestingly enough, hidden in the presentation was an alternative path that could potentially apply this technology to inexpensive set-top boxes - effectively turning the devices into gaming consoles. Remember, cell phone technology is relatively inexpensive and already used in SmartTVs and set top boxes today - so this isn’t a huge stretch. In essence, rather than buying a PlayStation or Xbox, you’d get gaming in the TV you bought and play your favorite title there.

Given that game consoles have a 5+ year cycle and that smartphone performance is running just a bit over 5 years (behind the PC), you can see the industry is close to an overlap point where the market might be encouraged to forego the next generation of consoles in favor of a low cost upgrade to a TV or set-top box.

As you may recall, Microsoft is already going down an ARM path with Windows 8, and since the Xbox is based on the Windows platform, I would expect Redmond to embrace such a move. In any case, Nvidia has been lagging on performance and needs a lower-cost, updated console - so both vendors may try to embrace this wave and ride it.

At this stage, Sony only has the one ARM gaming-specific phone, and logically should be one of the first to consider such a scenerio. However, the corporation's divisions don’t work well together, so I expect they are the most likely to try to fight this change.  

Don’t get me wrong, they all may try to fight this change, I’m just saying that two of the three vendors seem to be going down a more cooperative path already.

Problems to be Solved

To make Qualcomm’s vision a reality there are three problems that need to be solved. The first, as mentioned above, is that smartphones generally suck as controllers, particularly for twitch games - and would need a a broader "fix" than one phone can provide.  

Second, if the phone is to be the gaming tool of choice it needs a way to reliably and wirelessly shift the display to a TV, as an archaic cables are too easily disconnected during sharp movements.

Third, while Qualcomm demonstrated some incredible software tools to migrate games to their platform, game designers will still have to do a lot of hard work. While they clearly are developing games for phones, porting games originally created for a console may not make the the list of things they want to do.

Wrapping Up: The Smartphone is a PC

One of the changed realities we face this decade is the slow realization that tablets and smartphones are PCs. Step by step, they are moving into areas where PCs and PC derivatives like gaming consoles and media centers used to be.  

To be sure, we are in the midst of a change not unlike the PC revolution, and the dominate players who emerge at the end of it all will likely be different than those who ruled the PC market. This is the outcome Qualcomm is clearly working to create, as they strive to leave their competitors behind in a technological graveyard. 

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While you may have been surprised to learn that the Wii was the most popular game console for Netflix users, you should not have been surprised to learn that over "half of all Netflix users connect via a game console," as reported last week. It's similarly unsurprising to learn that Time Warner is looking to expand the reach of its popular HBO Go service from the web and mobile to connected TVs and – cue drum roll, please – video game consoles.

With over 4 million downloads for the mobile apps, Time Warner CEO Jeff Bewkes says, the HBO Go service is considered to be a hit. Subscribers of the premium cable channel can access every episode of HBO's many original series, from Deadwood to The Sopranos to Game of Thrones. Extending access to the television is an obvious next step; however, it's unclear if Time Warner would charge for TV access, like Hulu has with its Hulu Plus offering, or treat all screens the same, also known as The Netflix Strategy.

In addition to the price, we also don't know a date for availability of the service. Tell you what, HBO – let us subscribe to your fancy service and skip the onerous cable TV plan, and you've got yourself a deal!

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There is a theory in some quarters that the old-school video game console is on its way out.  This theory is wrong or, to be kind, premature by years or even decades.

The console, a modified computer system specially designed for use by gamers, replaced the arcade machine as the dominant means of playing and selling video games long ago.  The dominant console manufacturers are: Microsoft (maker of the Xbox 360); Nintendo (the GameCube, the Wii, the 3DS); and Sony (the various incarnations of PlayStation).  For purposes of brevity, I will here use the word “consoles” in a sense broad enough to include their smaller handheld cousins.

Smartphones and tablets take over their functions.  I don’t have to buy Sony’s (NYSE:SNE) hardware to play “Assassin’s Creed,” for example.  I can play it on Android, Nokia Symbian, and the Windows Phone 7 platforms as easily.   Although some people buy expensive hardware to play games such as Assassin’s Creed, if the hardware enhances the experience, nobody would buy expensive hardware to play “Angry Birds,” where the crudity of the graphics is actually part of the fun.

Jeff Karp, who heads the “EA Play” label of Electronic Arts (NASDAQ: ERTS),  a “platform agnostic” game developer, suspects the games market is moving away from the heavier hardware.  “After all, how many devices do people want to carry?” he asks.

Whatever may be their own long-term concerns, the major players in the console/handheld market show no signs of abandoning it in a search for greener pastures.  Nintendo (OTC: NTDOY) released its 3DS in Japan in February, and in North America, Australia, and Europe in March.  This was heavily hyped for its ability to create a three-dimensional effect without the need of glasses or other paraphernalia.

The challenge from proliferating tablets and ever-smarter smart phones comes at an especially bad time for Sony, which just reported a second quarter loss of $191 million, and a 59 percent decline in its operating profit compared to the second quarter 2010.  Many of Sony’s recent troubles are earthquake related. Sony has gone the price-cutting route with its latest offering, the PlayStation Vita.

Microsoft’s XBox 360 has just received a shot of market adrenaline from the success of  Kinect, the motion-sensing capability it has been offering since December.  Microsoft (NASDAQ:MSFT) has more recently released a  software development kit for Kinect.

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On the software side, Sony came out with its God of War III in 2010 and is said to be preparing God of War IV, for release in September 2012.

The console will survive the appearance of alternative and less-expensive ways to play simply because these games are absorbing.  For the serious fans (addicts might be a better word) they are life-defining.  An admirer of Kratos, the protagonist of the “God of War” game series, won’t be satisfied playing the game on his smart phone, any more than an admirer of the Star Wars movies will be satisfied seeing those movies on those same phones.   The latter needs the wide screen, the former needs the console.

Hardcore gamers will for a long time demand platforms that do justice to the characters they love, and the roles they want to inhabit.

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