How the Xbox 360 Got Its Groove Back

This column was originally published on RealMoney on Nov. 22 at 11:22 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Things are starting to look up for Microsoft's (MSFT Quote) Xbox 360 console, which hadn't exactly been flying off the shelves.

Today, Microsoft announced that its new action game "Gears of War" has become the best-selling Xbox 360 game of all time, moving more than 1 million copies worldwide despite being on the shelves for only about two weeks. In addition, Microsoft said that registrations per day for the company's Xbox Live gaming service have increased by more than 50% since the game was released.

But even more importantly, leading video-game retailer GameStop (GME Quote), on which I've been very bullish in the Breakout Stocks newsletter since mid-July, commented on its third-quarter conference call that the release of "Gears of War" has resulted in a significant increase in Xbox 360 sales. This is a very important data point, as it indicates that gamers have been looking for a reason to buy the Xbox 360, and now they have one. This also benefits software makers like Electronic Arts (ERTS Quote), as the Xbox 360 audience should increase in size nicely over the next few months. ...