Microsoft (MSFT) Hopes New Game Can Salvage Xbox

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One very popular video game is only available on the Microsoft (MSFT) Xbox. Halo, a violent space game, has sold 15 million units of its first two versions, according to The New York Times.

Halo 3 comes out next month. And, it cannot hit too soon. For the year ending June 30, Microsoft’s 10-K shows that its entertainment and device division, which is primarily Xbox sales, had revenue of $6.1 billion, but a loss of $2.1 billion.

The Nintendo Wii has been outselling Xbox and Sony (SNE) PS3, and with Take-Two’s (TTWO) big "Grand Theft Auto" game delayed, the video gamin introductions that might help holiday sales are not looking very healthy.

But, it would be fair for Wall St. to ask just how much halo effect Halo 3 will give Xbox. Core gamers who love the game may replace older Xbox units with the new Xbox 360 and Halo 3 sales may bring in new revenue. But, these are not the kind of "conquest sales" that Microsoft needs to take business away from Sony and Nintendo. That means the holidays could be rough for Redmond’s game unit.

Douglas A. McIntyre