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The Honolulu Advertiser
Posted on: Saturday, January 5, 2008

Microsoft's 'Halo 3' selling at video-game record pace

By Tim Culpan and Linda Shen
Bloomberg News Service

Hawaii news photo - The Honolulu Advertiser

Microsoft's Xbox 360 accounts for 14 percent of total revenue for the company's entertainment division. Microsoft began selling the Xbox 360 in November 2005.

ADVERTISER LIBRARY PHOTO | January 2006

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Microsoft Corp., working to make its entertainment division profitable, said it has sold more than 17.7 million Xbox 360 consoles since their debut in 2005, helped by its best-selling "Halo 3" alien-shooting game.

Consumers have bought more than 8.1 million copies of "Halo 3" since its Sept. 25 release, Microsoft spokeswoman Tina Conley said today in an e-mail. "Halo 3" took in $300 million in sales in its first week. That made it the fastest-selling video game ever and, as of November, the most popular title for any game system in 2007.

"Halo 3" is "the signature Xbox 360 experience," said analyst Michael Pachter of Wedbush Morgan Securities in Los Angeles. "I'll give Microsoft a tremendous amount of credit: They spent a butt load promoting that game."

Fans of "Halo 3" purchased 770,000 Xbox 360s in November, outselling all three of Sony Corp.'s PlayStation systems, David Riley, a spokesman for research firm NPD Group Inc. in Port Washington, New York, said today in an interview. Xbox 360 trails Nintendo Co.'s Wii, which sold 981,000 units.

Microsoft's entertainment division, which makes the Xbox 360, accounts for 14 percent of total revenue.

In October, the unit reported its first quarterly profit since the release of "Halo 2" in 2004. Sales rose 91 percent to $1.9 billion, beating the company's 40 percent growth forecast.

Microsoft began selling the Xbox 360 in November 2005, almost a year before the Wii and PlayStation 3 reached stores. Total Wii sales are likely to pass the Xbox 360's by March, Pachter said. The analyst, who advises buying Nintendo shares, doesn't have a recommendation on Microsoft's stock.

Even with the "Halo 3" boost, Xbox sales are "a little disappointing," said David Cole, an analyst with research firm DFC Intelligence in San Diego. Microsoft probably aimed to have sold 20 million consoles by now, he said.

"The Wii is kind of like a freight train coming down the track" behind the Xbox, Cole said.

Microsoft's reliance on blockbuster titles to make its entertainment division profitable isn't sustainable, Cole said, because hits are "few and far between."

The Wii sold out over the holidays, forcing retailer GameStop Corp. to issue vouchers for the console. Kyoto, Japan- based Nintendo said it plans to keep plants running at capacity to make the 1.8 million consoles a month needed to meet demand.

Nintendo said last month that it would ship 17.5 million Wii machines in the year ending in March. Sony, based in Tokyo, said in October that it may miss its sales target of 11 million PlayStation 3 units over that same period.

Total video-game hardware and software sales probably rose to as much as $19 billion last year from $12.5 billion in 2006, NPD's Riley said.

Microsoft, based in Redmond, Washington, fell 99 cents to $34.38 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock advanced 19 percent last year.