XBox Kinect is Key To Console's Comeback

REDMOND, Wash. ( TheStreet) -- The soon-to-be released Kinect device for the Xbox 360 isn't just a motion controller, but the latest symbol of Microsoft's ( MSFT) gaming momentum.

When the Kinect motion capture device releases Nov. 4, it will be the last major Xbox release in a year the Microsoft system got back into the game. The slimmer, less expensive version of the 360 was released in June after an unveiling at the Electronics Entertainment Expo and has topped the Nintendo Wii and Sony ( SNE) PlayStation 3 for the NPD Group's console sales high score each month since. Unlike previous Xbox 360 consoles, which were fraught with technical problems and kept gamers in fear the "red ring of death" would turn their Xbox into an expensive corpse, the new 360 has been devoid of such problems.

Kinect
Microsoft's Xbox 360 gaming system had a number of wins this year, and the Kinect motion capture device slated for release this month looks to be another.

"Microsoft has finally released a console that people feel safe buying," said Shane Satterfield, editor of GameTrailers.com, shortly after the new 360's release. "I think a lot of people waited until they sorted out their hardware issues and are finally jumping in."

As a result, overall Xbox sales are up 34% year-to-date and it was the only console to post September sales greater than those of a year earlier. Those sales have the Xbox dreaming of slaying a bigger boss: the Nintendo Wii and the annual sales title it's held since wresting it from the Xbox 360 in 2007.

Before the new 360's release, the Xbox's first-half sales trailed the Wii's by more than 530,000. By August, that year-to-date sales gap narrowed to a little less than 9,000. Those sales numbers got a boost last month when the Xbox 360 was bundled with copies of Halo: Reach, which sold 3.3 million copies last month without including the console combos and highlighted the Xbox's other key strength this year, namely strong software titles and lots of them.

Halo: Reach was the seventh Xbox 360 title in the past nine months to top the NPD Group's Top 10 list for software sales. February's Bioshock 2 from Take Two Interactive ( TTWO), April's Splinter Cell Conviction from Ubisoft, May and June sales of the 360 version of Take Two's Red Dead Redemption, July's release of Electronic Arts' ( ERTS) NCAA Football '11 and August's release of Madden NFL '11 all pushed 360 titles to the top of the heap. That string may not be over, either, as Microsoft's eagerly awaited Fable III releases tomorrow.

Even the Xbox's online presence increased this year, as its Xbox Live added Disney's ( DIS) ESPN to the fold and is expected to add Hulu Plus service soon. Microsoft is hoping the online service is strong enough to lift some more of its products, as Xbox Live has been announced as a key feature on upcoming Windows 7 smartphones.

Does any of this guarantee the Kinect's success? If Sony's release of its PlayStation Move motion controller for the PS3 on Sept. 17 is any indication, the Kinect should have no problem standing on its own. PS3 sales increased from August thanks largely to the sale of PlayStation Move bundles. Meanwhile, sales of PlayStation Move controller and game bundles increased total video game accessory sales 13% in September compared with a year earlier.

While a Move starter bundle costs $100 to the Kinect bundle's $150, the Kinect doesn't require extra navigation controllers ($30) or accommodations for a second player ($50, and $80 with an extra navigation controller). At a similar value to the Move and with a full month to work with, the Kinect may be just the power boost the Xbox 360 needs to take back the console crown.

-- Written by Jason Notte in Boston.

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Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.