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Here’s the latest action:

Dow Jones has its worst June since Depression: U.S. stocks tumbled on Friday and sent the Dow Jones Industrial Average to its worst June performance since the Great Depression. Record oil prices, credit-market write downs and the the economic slump spooked everybody. Goldman Sachs told investors to sell GM stock, sparking a sell-off as crude prices rose again. The broader S&P 500 index fell 2.9 percent on Friday. The Dow is at its lowest since September 2006. It has fallen 9.4 percent so far this month, its worst June since an 18 percent drop in 1930.

Rupert ready for another bite: Rupert Murdoch’s News Corp. and Permira Advisors made a $970 million bid to buy NDS Group, a provider of digital technology for pay-TV services. NDS Group said it would evaluate the $60 a share offer, which is 21 percent above Friday’s closing price of $49.70.

Take that, VMware: Microsoft unveiled its long-awaited virtualization technology to compete against VMware. Its Windows Server 2008 Hyper-V product has been in the works since 2003, when Microsoft acquired Connectix, which made software to run both Windows and the Mac OS on the same computer.

Palm stock heads to bottom: Palm’s stock fell eight percent Friday a day after the company reported a worse-than-expected loss for its fourth fiscal quarter. The company dropped $43.4 million, compared with a profit a year earlier. Revenue was down 26 percent to $296.2 million. It also expects to lose money in the current quarter. Plam’s Treo continues to lose ground to Research In Motion’s Blackberry and Apple’s iPhone.

Attention, K-Mart shoppers: Microsoft may have something up its sleeve for the E3 trade show starting July 14. The company is rumored to be cutting the price of its Xbox 360 Premium unit from $349 to $299. The latest rumor comes from a purported K-Mart ad. It’s been a long time since Microsoft last cut its game console prices by $50 in August, 2007. The price cuts say a lot. It shows Microsoft is the aggressor in driving down prices, putting pressure on both Sony and Nintendo to do the same. It also says that Microsoft sees a need to cut prices, perhaps because of slowing sales of its consoles. And the fact that it isn’t cutting $100 shows that the company isn’t crazy and doesn’t want to lose lots of money on each console sold.

Sony promises a big overhaul, new PlayStation 3 video downloading: Sony has been restructuring for three years but now CEO Howard Stringer is proposing an aggressive strategy built around video downloading and products that can talk to each other across the Internet. Video downloading will be part of products ranging from TVs to the PlayStation 3.

iPhone will debut in Canada with underwhelming prices: Rogers unveiled some not-so-popular prices for Apple’s Jesus phone for its scheduled debut in a couple of weeks.

Google speeds Blackberry search results: Google said that it has improved the speed of its mobile search results pages for Blackberry web browsers.

I tried to resist writing an ode to billyg. But the Borg effect has taken hold and I’ve got to join the legions of journalists with paeans to the god-of-I-don’t-know-what. If anybody should do it, it’s me. After all, Gates gave me material for two books.

Bill Gates is retiring from full-time duties at Microsoft today with a better reputation than ever. People know him now as a statesman of the industry, not the little punk who got rich with monopolistic behavior. He is the CEO who is creating jobs in China in the hopes of lifting everyone’s standard of living, not the kid who is whining about software piracy. And he is the world’s most generous philanthropist trying to save the developing world from health maladies, not the guy trying to choke off Netscape’s air supply.

Everybody has an opinion about whether Gates is a good guy or a bad guy. But there is no doubting that his image is a lot different than in 2000, when Ken Auletta painted an unflattering portrait of Gates in his book, “World War 3.0,” about the Microsoft antitrust trial.

A lot of this started with Xbox. For Gates, the 1990s were about keeping the government at bay in the antitrust lawsuit. He didn’t do so well. He came off as petty. As Steven Levy of Newsweek recounted, Gates threw a pencil at Levy during an interview in which they were debating the meaning of the word “antitrust.” That was the kind of thing you expected from Gates. The world had adopted a “containment” policy against Microsoft, making sure it never gave Gates the opening that IBM did when it hired Microsoft to build an operating system for the personal computer.

But with Xbox, Gates had a chance to play the white knight. When Sony started dropping hints about the PlayStation 2 in 1998, Microsoft went into a panic. Sony’s executives were boastful. Soon, they were saying it was going to be the comet to wipe out the dinosaurs and was “more than a PC.” Microsoft had to defend the living room, and Gates’ attempts to partner with Sony fell flat.

A small team led by Seamus Blackley, Kevin Bachus, Otto Berkes, and Ted Hase started agitating from the working ranks of Microsoft to create Microsoft’s own game console, the Xbox. One by one, they brought aboard fellow crusaders Ed Fries, J Allard, Cameron Ferroni, Rick Thompson, and Robbie Bach. Gates was the easy sell, while Steve Ballmer put the squeeze on everyone to build a real business. Read the rest of this entry »

You have to love it when companies such as Apple, Microsoft and Sony have been at work for months or even years to get content from your computer to your television — and then Google comes in, releases a tiny application, writes a three paragraph post on the matter and has it all solved.

Okay, it’s not quite that straightforward, but Google’s announcement of its Google Media Server is significant. This gadget is built on top of the Google Desktop application. It works alongside Google Desktop Search to find the media files on your computer and then lets you share them with a TV connected to a UPnP-enabled device at the touch of a button.

You may think you don’t know what a UPnP device is, but there’s a pretty decent chance you already have one in your living room. Do you have a Playstation 3, an Xbox 360 [update below], an original Xbox, or maybe an HP MediaSmart LCD TV? If so, you have one. If not, here’s a list of other UPnP media renderers you might have.

The application lets you play videos, look at pictures, listen to music and even watch YouTube videos right on your television. And did I mention it’s only 439 kilobytes big?

So without having to spend millions of dollars on researching, manufacturing and shipping a set-top box as some of its competitors have done, Google is using boxes many people already have and simply building a bridge into the living room for your content.

One caveat is that it’s PC-only at the moment, so Mac and Linux users are out of luck. But if this is a hit application, you can probably expect those shortly.

update: As commenter veverkap has dug up below, apparently this will not work with the Xbox 360 yet. Even though that is technically a UPnP device, Microsoft’s DRM checking is prohibiting another company that isn’t Microsoft from sending info to the box. Google could emulate this permission rather easily (I have a program on my Mac that does it), but appears to be scared of the legal rammifications.

Says Google’s Media Server Team:

At time of development the only way to connect the XBox 360 to a UPnP server, was to have a service that is only found on Microsoft services (used for registering for DRM content) and for the server itself to be claimed to be made by microsoft.  Legal would not allow us to pretend to be microsoft (although there are other servers out there that do).

[photo: Columbia Pictures]

Ted Price is one of the stalwarts of video game development. He founded Insomniac Games as an independent video game development studio in 1994. Since then, the company has sold more than 28.5 million video games. The president and chief executive of Burbank, Calif.-based Insomniac is perhaps the biggest die-hard PlayStation developer outside of Sony. Even as many other studios go cross-platform, Price’s studio has made games exclusively for the PlayStation, PlayStation 2 and PlayStation 3. Its big hits include “Spyro the Dragon,” “Ratchet & Clank,” and “Resistance: Fall of Man.” The latter was a key launch title that got the PS 3 off the ground in the fall of 2006 and squared off against Microsoft’s big title,”Gears of War” for the Xbox 360. Price also served the industry as chairman of the Academy of Interactive Arts and Sciences, which gives out the equivalent of the Oscars of the game industry. The company recently decided to open its first satellite studio in Raleigh, N.C. and is working on Resistance 2 for release this fall. Opening that studio is no light matter, since the company cares about its small-company culture and has been named three years running as one of the “Best Small Companies to Work for in America” by the Society for Human Resources Management and the Great Places to Work Institute.

VB: Why did you set up your new office in Raleigh, N.C.?

TP: When it comes to location, North Carolina has a thriving game development community in the Research Triangle. It has the colleges with strong computer science and art programs from which we’d like to draw. There’s a lot of talent on the East Coast that would like to work for Insomniac but doesn’t want to make the move to California. This is an opportunity for us to be available for talent.

There is [game developer] Epic [already in the region], Ubisoft’s Red Storm (Tom Clancy) studio and there are others. It’s a thriving game community that is very supportive of other companies.

VB: How is this consistent with the overall strategy of where you want to take Insomniac?

TP: We’ve always had the philosophy of quality over quantity. We’ve also had the problem of pressure to expand. As our production processes become more efficient, we have more opportunity. But we want to keep the Burbank office small and focus on just a few games at once. By starting in North Carolina, we can create more games, more intellectual property, but continue that small company feel in both places.

VB: Is game development changing and causing this expansion?

TP: That’s not the pressure we’re under. It’s self-imposed pressure. It’s opportunity for all of us. We love making games. We love to come up with new concepts, but because we want to remain relatively small, we can’t do the things we want to do.

VB: You’ve been interested in the past in different kinds of business model opportunities for game developers. I think what used to happen was that game developers became publishers.

TP: Perhaps. I don’t know too many who successfully made the jump from making games to publishing games. It’s different skills. We focus on what we do best, which is developing games.

VB: But I suppose there should be a way to become a bigger company and still focus on just the part about developing games? Foundation 9 or Bioware/Pandemic forged that path to become stand-alone development companies. Do some of those alternatives looking interesting to you?

TP: What’s most attractive to all of us is to maintain the core philosophies we’ve had from day one. To create a company where people are creatively free, where there is a lot of communication, where politics and bureaucracy don’t get in the way, and where the games are key. That’s why we’re moving in this particular direction. Read the rest of this entry »

Apple made a big splash at MacWorld this year when it announced that all of the major Hollywood studios had signed up to release movies through its iTunes store. However, many of the studios refused to let Apple rent the movies the same day they were released on DVD.

This changed a few months later as both Apple and the studios realized that people wanted to rent new release when they were actually well, new.

Now Sony is taking the next step.

As you may know, Sony owns a movie studio. That studio is releasing a big budget Will Smith superhero movie this Summer called Hancock. When Hancock is available to buy in a few months, guess where you will first be able to buy it? Not iTunes, not even DVD, but Sony’s own digital distribution service to be launched this Fall, Sony chief executive Howard Stringer told an audience in Tokyo this morning.

This is part of Sony’s plan to make its television and video game divisions profitable once again. Its new Bravia line of televisions will be able to receive downloads via the Internet without hooking up to cable or satellite. The same will likely be true for its Playstation 3 video game console, which will roll out its digital movie download service this summer.

If it can get access to Sony movies before they are released anywhere else, that could certainly help the company move more units — as well as give it a foothold in an arena it’s already late to: Digital distribution in the living room.

Both Microsoft and Apple have a big head start on Sony in that realm with their Xbox 360 and Apple TV devices respectively. Neither of those companies owns a movie studio however.

The move is somewhat interesting though by Sony. After all, it is the key proponent of the Blu-ray high definition disc format, which only recently beat its HD DVD rival (which Microsoft had backed). Blu-ray is also a key component of the PS3, and Sony appears to be undercutting it if it starts sending movies digitally before they come to that format.

This is a big step towards legitimizing digital distribution as the wave of the future for video. The Hollywood studios are still terrified of the digital piracy that has crippled the music industry, but the shift is inevitable. It’s good to see Sony taking the lead in innovation and forward thinking once again.

[photo: Hancock/Sony Pictures]

Former Broadcom executive Henry Samueli to plead guilty in backdating case — The Broadcom flameout saga continues, with former chief technology officer Samueli admitting that he previously lied to SEC investigators about whether or not he had illegally back-dated stock options.  Among Broadcom’s two founding Henrys, Samueli was the good cop. That’s why it was surprising that Samueli pleaded guilty to avoid jail time. But the other Henry, former CEO Henry Nicholas, is up for a raft of criminal charges from drug dealing to using prostitutes. [Samueli photo via Forbes.]

Game association trumpets games in the workplace — It’s no surprise that the Entertainment Software Association, the industry cheerleader for companies that publish video and computer games, would produce a positive report about games in the workplace. The ESA-sponsored study, carried out by KRC Research, shows that 75 percent of U.S. organizations that use video game-based training are getting positive results, and looking to expand their usage of games. Meanwhile, more than 75 percent of those without work-focused video games plan to introduce them in the next five years. If we didn’t enjoy any excuse to play games, we’d probably be a little more skeptical. Instead, we think this survey sounds about right.

More than one billion PCs now being used in the world — Research firm Gartner guesses that number and projects it to double by 2014.

Sony has lost $3 billion plus on the PlayStation 3 so far — “Even if the platform is ultimately successful,” an annual Sony company report says, “it may take longer than expected to recoup the investment, resulting in a negative impact on Sony’s profitability.”

LinkedIn may be coming to China — More here.

Review: Psystar’s unauthorized Mac clone is just like a real Mac — Psystar provoked excitement among many bloggers, at least, in April, as it promised to deliver a Macintosh operating system in a machine that it sells for far cheaper than the products that inspired it — in possible violation of Apple’s terms of service. No legal challenge has come from Apple, though. Now, Tom Krazit at CNET has a review of it here, after having used it for a month. He says it’s like using a Mac. [Photo via CNET.]

Five previously-undisclosed features due for Mac’s latest operating system, “Snow Leopard” — According to a scoop published by blog Apple Insider, the new features include a new multi-touch framework, smaller-sized applications, more advanced word processing features, auto activation of fonts, and support for the ZSF file system. Snow Leopard is due next spring. Also, we’ll see how fast Psystar implements it once it’s out.

Old iPhones worth as much as new ones on eBay — Blogger Jason Kottke breaks down observed sale prices on the auction site. And I quote:

- A lot of five never-opened unlocked 16Gb iPhones went for $2,755 ($551 per phone)
- A used unlocked 8Gb iPhone went for $405
- A used unlocked 16Gb iPhone went for $585.

Sun has a massive 256-thread Niagra processor coming in 2009 — The details here.

New York Times: Google News is not growing very fast – This article talks about issues at Google’s automated news aggregator. Although it’s not disclosed in the article, I suppose the New York Times would prefer its readers to use its own automated news aggregator, Blogrunner.

Kaleidescape has established itself as a well-known entertainment server in the homes of video aficionados for more than five years. Its $14,000-plus movie jukeboxes can store an entire library of DVDs on an array of hard disks. Next to the yacht and the private jet, a Kaleidescape System with hundreds of DVDs on it is a staple in the homes of Silicon Valley gazillionaires. (I have three myself — not).

Now the Sunnyvale, Calif.-based company is moving up the vanity ladder with the launch of movie players that can show DVD movies that are “upscaled” to 1080p, or more than twice the resolution of a typical DVD. (Upscaling means to take a video image and to enhance it with video-processing techniques so that it looks sharper. The video processor mathematically matches the DVD image to fit a wide-screen high-definition TV image). As such, Kaleidescape says that its upscaled DVD playback matches the quality of Blu-ray movies, which also play back at a resolution of 1080p.

“Many people won’t be able to tell the difference between upscaled DVDs and Blu-ray,” said Linus Wong, product development director at Kaleidescape.

I’ve seen upscaled DVDs and the video quality is truly stunning on a big home theater screen. (Kaleidescape isn’t the first to come up with these by any means; many upscalers take images to 720p resolution, which isn’t as good as 1080p). The edges of objects on the screen are sharp and colorful.

The Kaleidescape Systems use a futuristic interface where you can use a remote control to scroll through an array of movie-jacket covers as you pick the movie you want to watch. Jed Putterman, a San Francisco software executive, told me a while back that he enjoyed the quality of DVD movies on a big screen so much that he returned a Blu-ray player that he bought. A high-end video dealer, David Raife, owner of Paragon Technology Group in Aspen, Colo., echoed that comment in a statement from Kaleidescape.

In a closely watched battle with the movie industry, Kaleidescape won the legal right to copy DVDs to its hard drives so that its customers could quickly and easily access the movies. It has sold several thousand of its hard drives arrays over the years.

But the company hasn’t yet said whether it can get a license to do the same with Blu-ray disks. (It has told its dealers it will have a Blu-ray solution in 2009). Hence, Kaleidescape has a vested interest in making sure that DVDs remain the movie format of choice.

By enhancing the resolution of DVDs using its special video processors (from Sigma Designs), Kaleidescape can breathe new life into DVDs. For high-end video consumers, it means they won’t have to throw out their DVD libraries just to get the highest-quality video images on a home theater screen.

And for Blu-ray, it adds a new hurdle for the newest video format to overcome. Stan Glasgow, head of Sony’s U.S. electronics division, told me earlier this year that Blu-ray won the war with HD-DVD but still had to overcome the satisfaction that many people have with upscaled DVDs.

The $4,295 Kaleidescape 1080p Player takes up one rack in an entertainment center and includes the ability to import DVDs and CD-ROMs onto a hard-disk array (sold separately). A mini version will be available in July for $2,995. That one doesn’t include the DVD/CD-ROM drive. One of the cool features is that the Kaleidescape players can bookmark the exact spot where a movie starts, clipping off the FBI warnings and previews.

Kaleidescape is privately funded and has 140 or so employees.

Nintendo continued to dominate video game sales in May, with strong sales of the Wii helping to drive overall industry sales up 37 percent compared to a year ago. But the PlayStation 3 showed some strength, outselling the Xbox 360 in what has become a horse race for second place in the console battle, according to market researcher NPD Group.

U.S. video game industry sales for the month were $1.12 billion, up from $816.3 million a year ago. The Wii led console sales with 675,100 units sold. The Sony PS 3 sold 208,700 units, beating Microsoft’s 186,600 units sold. The Nintendo DS continued to win the portable gaming war, selling 452,600 in the month compared to 182,300 units for the Sony PlayStation Portable.

Overall game sales grew 45 percent to $536.9 million from $380.8 million. Year to date, U.S. video game sales are up 32 percent to $6.6 billion, an amount that is greater than the entire industry’s size in 1997, said Anita Frazier, an analyst for NPD. The industry is on pace to hit $21 billion to $23 billion in 2008. Both the Nintendo Wii and Nintendo DS have been on top for four consecutive months now. Nintendo’s biggest problem is that it can’t make Wii consoles fast enough.

Frazier said that the success of Grand Theft Auto IV, which continues to be the overall top-selling game, isn’t yet translating into big hardware sales for either the Xbox 360 or the PS 3. As NPD measures it, U.S. sales of GTA IV have topped 4.2 million units sold. Guitar Hero III from Activision has sold 2.5 million units so far this year, while Electronic Arts’ rival title Rock Band has sold 1.3 million units.

In June, Sony said it hopes for another big month with the launch of “Metal Gear Solid 4: Guns of the Patriots,” a highly anticipated title from Konami. Nintendo, meanwhile, is expected to get a benefit from sales of “Wii Fit.”

I can’t begin to tell you the number of emails and comments I’ve received since yesterday from people saying that the $10-a-month price increase in the data plan for the iPhone 3G will actually make the device more expensive over the course of its life. Some people were even nice enough to send me detailed numerical breakdowns to highlight the difference. I am well aware of this difference.

That’s exactly why I wrote a post asking about the data plan price (before the details were revealed) while I was still sitting in the WWDC keynote room yesterday after the event had wrapped up — I had a feeling Apple and AT&T would do something like that. It’s simply a smart move.

Let’s have a little discussion about perception versus reality.

Though many tech watchers are quick to realize what this monthly rate increase means, most of your average consumers will not realize this — and further, will not care. For them it’s about one thing: that $199 price. That can probably be traced to impulsiveness or rationalization, but for many, it will simply be reality.

Think of it this way: Compact fluorescent light bulbs (those twisty kind you’ve probably seen), save everyone who use them money over the course of their life versus regular light bulbs. The savings, thanks to lower electricity consumption, is usually many times over the price difference. So everyone uses them over regular light bulbs right?

Wrong.

A small percentage of people do. Why? Because they are more expensive up front to buy. Consumers see the up front cost and either don’t realize it’s in their interest to buy the blubs to save money long term, or simply don’t care about the long term.

Another example: The PS3 sold slowly when it was first released. Why? Because it was $600. Yet, even at $600, at the time, it was one of the cheapest Blu-ray players out there — and it also had arguably the most advanced gaming system attached to it. If you were in the market for both, it was actually a good deal.

But even for those not in the market for both, just compared to the Xbox 360 it was arguably a good deal. The 360 at the time was some $200 cheaper — but it had back-end costs to get to arguably its most useful feature: Xbox Live. You needed to pay $99 a year to access the full Xbox Live, and so over just two years, that price difference between the PS3 and 360 would be negated. Over the course of the products life, assuming you kept it for more than two years, you’d be paying more for the Xbox 360. (The PS3 does not charge to access its online system.)

And to look at this example one final way, when Microsoft released the Xbox 360 Elite for $480 to combat some of the PS3’s high-end features (HDMI, etc), reality became distorted even more. Sure, the Xbox 360 Elite was $120 cheaper than the PS3, but if you wanted to get next generation DVD playback on the 360, you stil needed by buy the HD DVD add-on, which at the time was another $200. This made the truly comparable 360 system actually $80 more than the expensive PS3. Again, the PS3 had its Blu-ray player built-in.

There are countless other example of these up-front costs versus back-end costs. Is it companies tricking consumers? Sure. But it’s also a very smart business move.

Apple and AT&T are going to sell a lot more iPhones at $199 versus $399 — even though the device will likely end up costing consumers more in the long run. Consumers flock to the quick deal rather than the long term bargain. They always have and always will.

Further, you could argue that it’s not really even Apple who is to blame here. A lot of people are quick to jump on Apple chief executive Steve Jobs for hypnotizing the crowd and making us all look past the reality of a more expensive device. In reality, Apple is no longer making money off of AT&T’s monthly contracts, that agreement has changed.

Instead, AT&T is paying Apple a subsidy for each iPhone sold and activated (and now they all must be activated in the store), to make up for the difference in bringing the price down from $399 to $199. While all of the details on this agreement are not yet known, it appears that it is AT&T and not Apple that is making this extra cash off of the contracts.

Of course Apple is going to benefit from this lower price as well, it will sell more units, and that is why it is playing up the new $199 price. But again, that’s just smart business.

It’s okay to complain about this iPhone price drop that really isn’t a price drop. Good for you if you realize this. But just remember that most consumers will not realize this and further, will not care to realize this. They just want to walk into a store and buy an iPhone for $199. True costs be damned.

I’m fine with what I see as the reality: the iPhone 3G is the upgraded version of the best mobile device I’ve ever owned — by far. It’s going to be just about the same price as the original version. Sold.

[Check out MobileBeat2008, VentureBeat's mobile conference on July 24. Vote for your favorite mobile application or service company]

[photo: flickr/cosmic kitty]

Here’s the latest action:

Sony opens to in-game ads — The company is about to announce support for ads in the PlayStation 3 video game console, and in-game advertising company IGA Worldwide will be the first to announce a deal, according to Forbes and other publications. As video games become both more lucrative and more expensive to make, this seems like an obvious revenue source, albeit one that may not be welcomed by all gamers. No word on which games will be the first to include ads, but I think there’s something weirdly appealing about the idea that billboard space in the Grand Theft Auto games could become the equivalent of a real billboard.

EA confirms acquisition of social gaming service Rupture — Game giant Electronic Arts has confirmed its acquisition of ThreeSF, the company behind Rupture. The service is the brainchild of Napster co-founder Shawn Fanning, and there have been rumors that EA had acquired ThreeSF for $30 million. EA did not release any details on the acquisition.

Music service Pandora now available as a desktop app — The startup, which delivers a personalized music stream to users, has built a desktop application using Adobe’s AIR platform. Pandora could already be streamed to mobile devices or home entertainment systems, but as far as computers go, this move is a big step because it moves Pandora out of the web browser. It’s not exactly a subtle application that runs in the background, but instead looks almost identical to the Pandora homepage. The company says this is necessary “for now” to display ads.

YouTube adds video annotation feature — Video creators can now add informative or snarky commentary in speech bubbles or other formats to the movies they upload. I would have included a sample video, but it looks like the annotation feature doesn’t support embedded videos yet. The feature is still in testing mode, and YouTube says full functionality will eventually include embedded videos and support for multiple languages. There don’t appear to be any plans to let viewers — rather than creators — add their own annotations.

SoCal Edison agrees to buy power from eSolar, a solar thermal company — The companies say the deal should result in the construction of 245 megawatts worth of concentrating solar towers in Southern California’s Antelope Valley by 2011.

The truth is revealed about Twitter’s constant downtime — The startup has been doing a lot of talking about the reasons behind its scaling problems, but Valleywag has an alternate explanation.

As I sit around my living room looking at my $150 cable bill and stare at the multitude of set top boxes I have hooked up to my television set, I often wonder if there won’t be a day where we get all of our content over the Internet on one box. By this I mean everything: movies, television shows, music and video games.

As of right now the video game consoles seem perhaps best poised to handle such a task as they are both powerful and widespread. Two in particular, Microsoft’s Xbox 360 and Sony’s Playstation 3, already offer some of this media content; however it is second-hand, being placed on these networks after it has shown in theaters, been on DVD or played on television. Today, Sony is lauching a program that is Playstation Network-exclusive, Qore.

Not surprisingly, this show is video game-centric, but Sony appears to be taking it seriously by pulling in the host of Revision3’s Tekzilla and former Mahalo Daily host, Veronica Belmont, to anchor the series. The show is filmed in HD and will offer gamers a behind-the-scenes look at some of their favorite Playstation games and exclusive content.

There are a couple of downsides. First of all, each show will be $2.99 (or $24.99 for an annual subscription to all 13 episodes). This seems a bit high given that most television content on iTunes is only $1.99. However, it’s also important to note that while Microsoft’s Xbox Live network is $50 a year for a gold subscription, Sony’s Playstation Network is free.

The second downside is that the show will only be available on the Playstation Network, and you will have to have a Playstation 3 to watch it. This gets back to what I was talking about earlier, the idea of these video game consoles getting exclusive, first-run content. It will be interesting to see if Sony expands upon this idea with other shows or movies. Remember, it does own a movie and television studio.

Microsoft is using its Xbox Live service for a similar concept, but on a much smaller scale. Its director of programming for Xbox Live, Larry Hryb, aka Major Nelson, hosts short video podcast that go up on the network on Thursdays. These segments are free, however they are only one minute long. Qore will be 40 minutes long.

I hope that one day I’ll be able to ditch my cable company and get all my content over the Internet on something like a video game console. However, if companies like Time Warner Cable get their way with metered Internet usage, that will not happen.

Belmont has a bit more about Qore in a Q&A post on her blog.

Game startup Trion World Network is today revealing how it is designing massively multiplayer online games with high graphics fidelity that will run across video game platforms — such as consoles, PC, mobile, and set-top boxes — a feat that no other video game company has yet pulled off.

The bold scheme will let the startup launch multiple games at once on what it calls the “Trion Platform,” which consists of software that runs on a bunch of game devices and exists on a network run by Hewlett-Packard. The games are cross platform because they run on servers in contrast to most desktop-based or console-based games.

“For decades, games have run on the clients, but we’re transforming them so they are completely server based,” said Lars Buttler, chief executive of Trion in Redwood City, Calif. “We think that will disrupt the industry.”

I’ll talk about the significance of shifting from client to server games below, but it’s a bit like how Salesforce.com disrupted traditional business software companies with its software-as-a-service, or how delivering software over the web has disrupted delivery through traditional means.

Trion may have amibitious goals, but it’s done some heavy lifting in just a couple of years: signing up partners and investors, building game design teams and creating a fundamental technology infrastructure. While most start-ups take on an innovation in just one part of the value chain, Trion is trying to create most of that value chain itself.

“It’s like Apple designing everything it needs,” he said. “It’s very risky, but highly profitable if it works. We’re not just doing a little piece. We’re bringing it all together.”

The first major partner being announced today is the Sci Fi Channel, but Trion plans to have a whole portfolio of online game worlds. I’m duly skeptical until I see how good these games look and how fast they play. Server-based games aren’t new as a concept. Typically, they have lousy graphics quality and suffer from time lags because of bandwidth limits, said Billy Pidgeon, a game analyst at International Data Corp.

Coordinating fast-action games is so tough that they usually have to be limited to 16 to 64 online players in a single game. Trion wants to allow thousands of players in the same game arenas. Others who try to build massive game worlds with thousands of players always run into some trade-off that compromises the quality of the experience.

Buttler can see the company he wants to disrupt outside of his company’s window, since Trion’s home is within view of Electronic Arts‘ headquarters. The more focused target, however, is Blizzard’s “World of Warcraft,” which has 10 million subscribers worldwide and is the No. 1 online game. Read the rest of this entry »

Saturday morning games have replaced cartoons in my household. And this weekend, the kids and I are giving Wii Fit a whirl. This is the new game from Nintendo whose aim is to get gamers off the couch and exercising.

While Microsoft and Sony are in the arms race to give hardcore gamers ever-improving eye candy with shoot-em-up games in highly realistic 3-D worlds, Nintendo’s Wii is aimed at expanding the audience for games to nongamers. Wii Fit is yet another in a series of games that show that creatively redefining what a game is — something Gabe Zichermann calls Funware — can lead to a breakthrough hit.

Wii Fit has already sold more than two million units in Japan and it debuts on Monday (at the Nintendo store in New York only, then across the country on May 21) the U.S. At $89.99, it should keep the cash registers ringing for Nintendo, after last month’s big Wii hit “Super Smash Bros. Brawl,” and it just might hold at bay the rivals who are benefiting from the record sales of “Grand Theft Auto IV,” which is not available on the Wii.

The Wii Fit game comes with a Wii Balance Board, an ingenious little device that looks like a scale for measuring weight. Normally, you’d think it would take a lot of 3-D depth perception and motion capture to record the actions of a body in motion. That’s what a lot of companies such as 3DV and PrimeSense are doing. But the Wii Balance Board is a new accessory for the Wii that costs a lot less and relies on the simple mechanics of scale springs to measure body movement.

The board has a lot of springs underneath it, while the typical scale has only one. Those springs can detect which way you’re leaning when you’re standing on the Wii Balance Board. It then calculates your body position in order to figure out what you’re doing and where you are moving. This simple mechanical device, connected wirelessly to the Wii console, is yet another example of less-is-more design from Nintendo, which is a close rival to Apple in the care it builds into the products. Indeed, Nintendo started working on the Wii Fit game even before the launch of the Wii in the fall of 2006. It has taken its time with the design of the game and the Wii Balance Board — and it shows. There has been a long history of failed exercise-gaming devices, as this article notes. But Nintendo has nailed it. Read the rest of this entry »

April is the coolest month for video game sales.

Sales of the U.S. video game industry grew at a red hot 47 percent in April to $1.23 billion, up from $839 million a year earlier. Brisk sales of “Grand Theft Auto IV” at the very end of the month helped drive sales upward despite a recession that has hurt consumer spending in other areas, according to market researcher NPD Group.

Year-to-date sales are up 31 percent over a year ago at $5.47 billion. During the month, hardware sales grew 26 percent to $426.2 million, software grew 68 percent to $654.7 million, and accessories grew 39 percent to $154 million.

The console war saw little change. The Nintendo Wii sold 714,200 units, more than its rivals combined. The Microsoft Xbox 360 edged out the PlayStation 3, selling 188,000 consoles compared to the PS 3’s 187,100. The PlayStation 2 sold 124,400. In portables, Nintendo dominated with the DS selling 414,800 units versus Sony’s 192,700 for the PlayStation Portable.

Microsoft announced yesterday that it was the first console to hit 10 million consoles sold in the U.S., but analysts shook it off as an irrelevant number, since unit sales of the Nintendo Wii have dominated worldwide sales. More significant, however, is that Microsoft says Xbox Live membership has now topped 12 million worldwide. And to date, consumers have spent $9.7 billion on Xbox 360 overall to date.

Anita Frazier, an analyst at NPD, said that normally at this stage in the hardware cycle, more sales should be coming from hardware. But software sales were hot thanks to GTA IV and other big games. The pipeline of content continues to look good, with big games coming on all the consoles. Read the rest of this entry »

Sony, once the undisputed leader in game consoles, has suffered several billion dollars in losses in recent years.

But Sony predicted the game group would be profitable in the fiscal year that ends March 31, 2009.

Overall, the electronics company is healthy. Sony released its overall earnings today for its fiscal year ended March 31, showing a 192 percent increase in earnings and a 6 percent increase in revenue.

The game division, however, is still losing money. The division saw its sales grow 26 percent to 1.284 trillion yen, or $12.3 billion, but its operating loss was 124.5 billion yen, or about $1.2 billion. The loss was down from 232.3 billion yen, or about $2.2 billion, a year earlier. The improvement is due to smaller production costs for the PS 3.

It’s about time for Sony to recover. Microsoft, after seven years of game-related losses, is expected to turn a profit in the Entertainment & Devices group that includes the Xbox 360 and PC game business in the year that ends June 30. It’s almost as if the two have traded places, with Sony bleeding as Microsoft gains. But it could be a very powerful thing if Sony’s movie, game, electronics and other businesses all kick into high gear at the same time.

Things are looking better for Sony’s upcoming games. I’ll see Konami’s “Metal Gear Solid 4,” the big exclusive for the PS 3, tonight in a preview. And Sony reported it got a boost in console sales (as did Microsoft) from the release of Grand Theft Auto IV. Other big titles include “LittleBigPlanet,” “Resistance 2,” and “Gran Turismo 5 Prologue.” The last game is already out and Sony said sales of that franchise have topped 50 million.

Sony sold 9.24 million PS 3s during the fiscal year, up from 3.61 million a year earlier. PS3 software sales leapt were 57.9 million units, up four-fold from 13.3 million a year earlier. The company expects PS3 sales to top 10 million units this fiscal year.

PlayStation Portable sales were 13.4 million units, up from 9.5 million a year earlier. PSP software sales were up 1 percent to 55.5 million units. The company expects to ship 15 million PSPs during the year ending March 2009.

PlayStation 2 hardware sales fell 7 percent to 13.7 million. PS 2 software was down 20 percent to 154 million units, from 193.5 million a year earlier. Sony expects to sell 9 million PS 2s this year.

The video game console business is a three-party war, between Microsoft, Sony and Nintendo.

If you’re not winning the console war, it’s good to say that the war isn’t over yet.

In fact, it may not be over for years. That’s what Shane Kim, head of Microsoft Game Studios, told me yesterday at the company’s game showcase event in San Francisco. I sat down with Kim with a group of game journalists to discuss what it’s like in the trenches, with Nintendo at No. 1 and Microsoft and Sony battling it out for No. 2.

Q: How are you juggling the release schedules for the big titles coming for the Xbox 360?

A: We don’t want to release titles on top of each other. Especially similar titles. “Too Human” is coming out in the near future (August). We’re not worried about that running into other titles, knock on wood. The two big titles we have to keep apart are “Fable II” and “Gears of War 2.” You want them separated by a few weeks. Gears of War 2 is coming out in November. Peter Molyneux (developer of Fable II) knows that and has that in mind.

Q: You have a lot of big games. Are there any smaller titles that aren’t here?

A: The only two titles that we have announced but aren’t here are “Alan Wake” and “Halo Wars.” Those aren’t smaller titles. I’d rather not show you since, ultimately, you guys might be disappointed. And you guys would write that. It’s software.</