Industry Veteran Says PSP 2 Could Launch This Fall

Dave Perry, industry veteran and chief creative officer at the reinvented Acclaim Games told video game blog Kotaku that a successor to Sony’s [SNE] PSP is real and could arrive as soon as this fall.

"I spoke to a developer who is working on it right now," he said. "I know this developer is already working on it, so that means they have a prototype. That would sound like a fall release to me."

Perry implies the new PSP iteration will lose the UMD drive in favor of digital downloads via PC or direct to the handheld via Wi-Fi. "I've been pounding on Sony for a long time to make the PlayStation Portable relevant and not to let Apple [AAPL] stroll away with the portable game market," he said.

While saying Apple is or will stroll away with the portable game market may sound like a stretch (it is: Nintendo’s DS has a firm grasp on the market with an installed base of 96 million), the iPhone/iPod touch maker is definitely making an aggressive run at the market with constant print and TV ads for the devices, touting their gaming capabilities.

Sony is clearly at a crossroads if there’s any truth to Perry’s digital download statements because a big chunk of retailers’ margin comes from game software. The rise in digital downloads could mean the proliferation of PlayStation Network cards and/or Memory Sticks preloaded with content.

Ubisoft Partners With Gold’s for Wii Fitness Title

Ubisoft is partnering with Gold’s Gym to develop Gold’s Gym: Cardio Workout exclusively for Wii.

The title, licensed by Rocket Co., will be available on March 31. As a part of the partnership, the game will be cross-promoted between Ubisoft and Gold’s. Each game will come with a coupon for one free week at Gold’s, while the game will be on display at Gold’s Gyms, on Gold’s website, and the trailer for the game will be a part of in-gym broadcast network.

The game will be compatible with Nintendo’s Wii balance board, and will provide a variety of cardiovascular exercises including running, boxing, and sit-ups.

Nintendo Assists in Math Promotion

Nintendo is partnering with math education organization Mathcounts by challenging middle school math clubs across the US to boost their membership with the ultimate goal of winning DS systems and copies of Personal Trainer: Math for the handheld.

Between now and March 25, Mathcounts is encouraging math clubs across the country to participate and increase their memberships. The nonprofit organization will randomly select four schools with at least 12 participating students in their Mathcounts Club Programs to each receive 20 DS systems and 20 copies of Personal Trainer: Math (that comes to a total of 80 DS systems and 80 games, for the less mathematically inclined).

“Anything that gets kids more interested in math helps prepare them for whatever careers they eventually choose,” said Cammie Dunaway, Nintendo of America’s EVP of sales & marketing. “Personal Trainer: Math is great in a competitive club environment.”

More information on the program can be found at Mathcount’s website.

Report: Half of Xbox Live Subscribers Pay to Play

More than half of Xbox Live subscribers pay to play in online multiplayer  matches, this according to a report by the Seattle Post-Intelligencer, which says it reviewed an internal Microsoft [MSFT] document that includes subscriber figures.

The company said last month the number of Xbox Live subscribers grew 70 percent to 17 million worldwide, but did not discern how many of those subscribers are gold members, the ones who pay to play online games.

The Post-Intelligencer  report saw a fairly outdated document, an Excel workbook from a year ago with projections only to June 2008, which was well before Microsoft’s New Xbox Experience (NXE) launched in November. The workbook showed that 56 percent of worldwide Live users paid either an annual, three-month or monthly fee to play online games via their Xbox 360s. The number was higher here in the US at 60 percent.

That NXE introduced several new features consumers may find compelling, particularly the inclusion of streaming movies and TV shows from Netflix [NFLX] for gold members who are also Netflix subscribers. It’s likely the number of paying subscribers grew this past holiday season, due to the NXE launch.

As the Post-Intelligencer reporter stated, it is difficult to put the numbers in perspective when Microsoft keeps the number of paying subscribers close to the chest and its competitors in Nintendo’s Wi-Fi Connection and Sony’s [SNE] PlayStation Network do not charge for online gaming through their respective consoles.

True to form, Microsoft declined to comment to the Post-Intelligencer on the document it reviewed, but did confirm the majority of Xbox Live subscribers are gold members.

Sony: 20 Million Registered PSN Users

More than 20 million users worldwide have registered accounts on Sony’s [SNE] PlayStation Network, the company said today.

Registration for PSN is free and gives players access to things like online multiplayer gaming, movie downloads and game demos/add-ons. More than 380 million pieces of content have been downloaded since PSN’s November 2006 launch, and total sales have exceeded $180 million, Sony said.

Sony’s PlayStation Home, a 3D virtual world for PSN users that launched in December and promises in-world games, ecommerce and other activities has registered more than 4 million users, Sony said.

Nintendo Goes on Piracy Offensive

Nintendo has singled out China, Korea, Brazil, Mexico, Spain, and Paraguay as hotbeds for piracy in comments to the US Trade Representative under the 2009 “Special 301” report and is asking the United States to take further steps.

Piracy of Wii and DS products has increased during the year, Nintendo said, attributing this to the proliferation of mod chips and game copy devices, which circumvent embedded security.

“It is important for parents to note that if users of circumvention devices are children, they may be exposed to unsuitable content downloaded from the Internet and played on their Nintendo systems,” said Jodi Daugherty, Nintendo of America’s senior director of anti-piracy.

Nintendo mentions China as the hub of production for counterfeit production of its products. Websites selling these products within China and to the world is increasing, and Nintendo has called upon Chinese customs officials to stop shipments of any infringing products.

In Korea, Nintendo cited an early 2009 customs raid of 10 premises resulted in the seizure of more than 75,000 game copiers as a positive sign, but still believes piracy in that country is on the rise. The company says it is “pleased with Korea’s consistent customs seizures,” in a statement.

“Piracy is the single greatest threat to the innovation, artistic commitment and technological advancements enjoyed by millions of consumers worldwide,” said Entertainment Software Assciation CEO Michael Gallagher. “Piracy is a job killer that the world economy cannot afford in these difficult economic times. Countries that skirt obligations to combat piracy need to understand the unacceptable damage they are facilitating —and those countries that invest  in protecting intellectual property rights and ensure that piracy is not tolerated at any level should be lauded.”

Latest Puzzle Quest Now Available

D3Publisher has shipped Puzzle Quest: Galactrix for DS and PC.

“Puzzle Quest: Galactrix is a truly high caliber and worthy successor to Puzzle  Quest: Challenge of the Warlords, the #1 selling new puzzle franchise in 2007 according to NPD,” said D3Publisher President/CEO Yoji Takenaka. “D3Publisher is committed to delivering Puzzle Quest: Galactrix and all our games to a wide and diverse audience, and our dynamic combination of retail and digital distribution will help achieve that goal to the highest degree.”

The title was developed by Infinite Interactive. Asypyr Media is publishing the PC version which retails for $20 while the DS version sells for $20.

THQ Ships New 50 Cent Title

THQ has shipped 50 Cent: Blood on the Sand for Xbox 360 and PlayStation 3 today.

What’s notable for this title is two things: it’s getting significantly better reviews than its predecessor, 50 Cent: Bulletproof and this one includes an album’s worth of new tracks from the title’s star, 50 Cent. The tracks are exclusive to the game, says 50 Cent.

The 50 Cent title is selling for $60 on both platforms.

Report: Casual Games to Break $1 Billion Barrier in 2013

Casual game revenues will exceed $1 billion by 2013, predicts a report by market research firm Parks Associates.

Game companies that specialize in direct downloads should embrace social network sites like Facebook as a key strategy to continue rapid growth of the casual game market, says the report entitled Networked Gaming: Driving the Future II. Doing so as well as offering persistent identities will expand companies’ traditional target demographic of women ages 35 to 54, the report says.

"Game companies should use social networks and gamer communities as marketing and distribution channels for their new and existing games," said Stuart Sikes, president, Parks Associates. "Gaming has proven remarkably recession-proof, so as companies try to capture subscriber dollars, these offerings will serve as differentiators in a very competitive market."

These features can also build gamer interest and loyalty among the growing number of free-to-play MMORPGs, which will include over 20 million gamers by 2013, the report says. Large publishers should build cross-platform, gamer-centric networks and online publishers should also leverage open-platform efforts like Facebook Connect and MySpaceID, allowing users to enter online gaming websites with their social network ID and share their online activities with their network of friends.

Activision Licenses Bakugan Property

Activision has inked a deal with Nelvana Enterprises to develop and publish games based on Nelvana’s toy and TV series, Bakugan.

The games will appear on all current generation consoles, DS, and PlayStation 2  this fall, Activision said. Japanese studio Now Production is developing the titles.

Bakugan airs on Cartoon Network in the US and internationally and on Teletoon in Canada. The property recently won three "Toy of the Year" awards from The Toy Industry Association: overall Toy of the Year, Boy Toy of the Year, and Property of the Year.

Sony, Publishers Re-Up PSP Commitment

Sony Computer Entertainment America revealed its bevy of plans for  PSP, including the introduction of its critically acclaimed LittleBigPlanet to the handheld as well as a new hardware offering to attract young female gamers.

At its annual retail and publisher conference, “Destination PlayStation,” Sony announced its new hardware bundle, the Hanna Montana PSP Entertainment Pack. The bundle, launching in July, will include a new lilac PSP color as well as Disney Interactive’s Hanna Montana game, a selection of Hanna Montana TV episodes on UMD, a 2GB Memory Stick Pro Duo and stickers to customize the PSP. Ubisoft will assist Sony in targeting the “tween” girl crowd by bringing its Petz series to PSP.

Sony will also introduce its Assassin’s Creed PSP Entertainment Pack, which will mark the debut of Ubisoft’s Assassin’s Creed on the handheld (and of course be included in the pack) and a “piano black” PSP. Both the Hanna Montana and Assassin’s Creed packs will retail for $200.

The company boasted strong publisher support for PSP, with exclusives such as Rock Band Unplugged from Electronic Arts [ERTS]. The title will be the first PSP game to include a fully featured in-game store for users to download content in the North American and European markets.

Rounding out the Sony’s PSP publisher support was Square Enix's Dissidia Final Fantasy, which has sold 850,000 units since launching before the holidays in Japan. The RPG will launch in the US this summer. Sony’s first-party PSP titles will include MotorStorm Arctic Edge and LittleBigPlanet, both launching this fall.

Sony also previewed its upcoming PlayStation 3 lineup at the event, including platform exclusives such as Killzone 2, inFamous, MLB '09: The Show, Mag, Uncharted 2: Among Thieves and God of War III to launch throughout the fiscal year.

PopCap Buys Small Arms Developer

PopCap Games has acquired Gastronaut Studios, best known for its Xbox  Live Arcade title Small Arms.

Under the terms of the deal, all of Gastronaut’s assets and employees become a part of PopCap, including exclusive license of Gastronaut’s tools and technologies. Gastronaut’s founder Jacob Van Wingen will retain exclusive rights to his company’s original properties, including Small Arms and its upcoming action puzzle title Gel.

Gastronaut developed PopCap’s Feeding Frenzy 2 for XBLA in 2006 and is working on an XBLA adaptation of PopCap’s time killer, Peggle.

"The Gastronaut Studios acquisition signals PopCap's continued commitment to internal development of top quality games for a range of platforms," said PopCap CEO David Roberts. "Given the success of Gastronaut's top-selling Small Arms franchise in particular, there's little doubt that PopCap has significantly increased its development capabilities and creative firepower."

Sony Buzzes in Pizza and Pepsi Promotion

Sony Computer Entertainment America will partner with Little Caesar  Enterprises and Pepsi for a national scratch-off game promotion, “Buzz in to Win.”

The promotion includes national marketing and advertising components and offers Little Caesars' customers across the country a chance to win one of 450 PlayStation trivia prize packs, including Sony’s Buzz! games, PlayStation 2, PlayStation 3, and PSP.

Little Caesars customers can receive a "Buzz in to Win" scratch-off code card by visiting participating Little Caesars restaurants and purchasing a fresh “Hot-N-Ready” pizza with any Pepsi beverage. Customers scratch off their code card and enter their code at promotion’s website to determine if they have won.

Customers who purchase a “Hot-N-Ready” pizza at Little Caesars locations may also receive a coupon for $5 off any new Buzz! title at participating GameStop stores or online at GameStop.com

The "Buzz in to Win" promotion starts today and continues through April 27.

Court Says California Can’t Restrict Violent Game Sales

Yet another anti-video game law has been shot down in court, this time in California, where a US Court of Appeals rejected a proposed law which would restrict the sale of violent video games to minors.

The court ruled in the case of Video Software Dealers Association (now the Entertainment Merchants Association) v. Schwarzenegger that the law would have been a violation of the First Amendment’s guarantee of freedom of speech.

“We are extremely gratified by the court’s rejection of video game censorship by the state of California. The ruling vindicates what we have said since the bill that became this law was introduced: ratings education, retailer ratings enforcement, and control of game play by parents are the appropriate responses to concerns about video game content,” said EMA President/CEO Bo Andersen.

Andersen said he expects some California officials to push the state to have the US Supreme Court review the decision. “The state should not acquiesce in this demand, particularly in light of its budget difficulties. The state has already wasted too many tax dollars, at least $283,000 at last count, on this ill-advised, and ultimately doomed, attempt at state-sponsored nannyism,” he said.

“This is a win for California’s citizens. This is a clear signal that in California and across the country, the reckless pursuit of anti-video game legislation like this is an exercise in wasting taxpayer money, government time, and state resources,” said Mike Gallagher, president/CEO of the Entertainment Software Association, which combats anti-video game legislation on a national level.

Behind the Scenes of Nintendo’s DSi

While it’s commonplace for movies to get a behind the scenes look, the same can’t be said of handheld video game consoles. Nintendo has changed that, and today offers an interesting read on how its DSi came to be.

Donning the journalist’s cap is none other than Nintendo President Satoru Iwata, who talks to three engineers from the DSi design team.

While we won’t reproduce every last detail found in the interview in this space, here’s some points we found to be compelling/amusing:

• The DSi’s two cameras were in the design from the beginning. The first two iterations of DS already had two “senses,” touch and hearing. The cameras represent DSi’s “sight.”
• Shigeru Miyamoto “forcefully” pushed for DSi to accept SD cards and promised to make use of the media.
• The original DSi design had two slots for DS games, enlarging the handheld’s overall size and getting a chilly reception within Nintendo’s walls.
• A member of the team shares a light moment when he observes engineers were “under pressure” to keep costs down and Iwata interjects, “Sorry about that.”
• We got a chuckle when Iwata says, “Nintendo doesn’t want to treat the products that are already out there as ‘old’ and say to consumers, ‘Now you’ve got to buy our latest product!’”
• Yeah, right.

LittleBigPlanet Gets Huge Praise by Peers

Sony’s [SNE] PlayStation 3 may be last place in the console race, but its LittleBigPlanet is reaping serious praise from industry developers.

The title, developed by Media Molecule, won eight Interactive Achievement Awards last night in Las Vegas, including Game of the Year. The industry praise mirrors the glowing reviews it received in the gaming press. LittleBigPlanet is nominated in seven categories in next month’s Game Developers Choice Awards at the Game Developer’s Conference in San Francisco.

The Academy of Interactive Arts & Sciences, which facilitates the IAAs, also inducted industry icon Bruce Shelley into its Hall of Fame. Shelley's fellow co-founder of Ensemble Studios, Tony Goodman, presented his award after a video retrospective of his career. In a partnership with the Academy, Independent Film Channel will broadcast a half hour special with highlights from the IAAs in April.

The full list of winners are:

Disney Brings Spectrobes to Wii

Disney Interactive announced it will publish Spectrobes: Origins for Wii this  fall.

Developed by Genki, Spectrobes: Origins follows Spectrobes and Spectrobes: Beyond the Portals for DS. Those two titles sold a combined 1.6 million units worldwide, Disney said.

This marks the first time the series will appear on Nintendo’s popular console.

EA, American McGee Reunite for New Alice Game

Electronic Arts [ERTS] will once again collaborate with designer American McGee to develop a sequel to 2000’s American McGee’s Alice.

The untitled game is in development for PC, PlayStation 3 and Xbox 360 by McGee’s Spicy Horse studio.

“This new project is a dream come true for me and the fans who’ve kept the Alice flame alive,” said McGee, who is the founder and senior creative director at Spicy Horse. “EA gave us creative latitude and support on the original game which resulted in something beautiful and daring. This trip through the looking glass promises to be even more exciting.”

Neither EA nor Spicy Horse gave a timetable on when the game will ship, but expect this to be one of those “when it’s done” titles.

Nintendo Gets Favorable Ad Marks

Nintendo was the only video game publisher whose Q4 advertisements earned above average scores in the Video Game Advertising Performance Index (AdPi) Audit performed by Phoenix Marketing’s travel and leisure division.

The audit measures effectiveness and impact in three categories: print, TV, and digital. Specifically, it measured consumers’ reactions to 30 ads that were in the market from October through December 2008. Other participants in the audit were Activision [ATVI], Disney Interactive, Electronic Arts [ERTS], Microsoft [MSFT], MTV Games, Sony [SNE] and Ubisoft.

Consumers were asked if they would purchase the game, if the ad was worth seeing again, and if the ad was inspiring or worth talking about. AdPi scores show each ad’s strengths and weaknesses, which were evaluated against the respective ads’ objectives. The AdPi approach factors in actual ad spending to help companies determine overall in-market ad impact and success.

The highest-rated ads were:

• Nintendo’s Wii Music and Activision’s Call of Duty: World at War in the TV category.
• Nintendo’s Wii Fit, Disney’s Think Fast and MTV’s Rock Band 2 in the print category.
• Nintendo’s Wii Music, Activision’s Call of Duty: World at War and Ubisoft’s The Price is Right in the digital category.

Phoenix’s David Pluchino pointed out that high ad spends did not always translate into significant increases in purchase consideration. Spending levels in the media categories varied widely. Television ad budgets evaluated ranged from $1.4 million to $7.3 million. Print budgets ran from $200,000 to $1.4 million.

Fallout 3 Designer to Keynote GDC

Fallout 3 Lead Designer and Writer Emil Pagliarulo will be the keynote speaker for the Game Career Seminar at next month’s Game Developer’s Conference.

Pagliarulo’s keynote will be presented as an interview-style discussion with  Spike TV’s Geoff Keighley. Titled “Unlikely Beginnings: Fallout 3’s Lead Desginer on His Path Into the Game Industry,” the keynote will explore Pagliarulo’s career path from almost becoming an elementary school teacher to game journalist to eventually designing one of 2008’s most critically acclaimed games.

The Game Career Seminar is programmed by the GDC in association with GameCareerGuide.com for individuals interested in learning how to build a career in the videogame industry. The seminar takes place at GDC on Friday, March 27 from 9 a.m. to 5 p.m. at the Moscone Convention Center in San Francisco. The GDC Career Pavilion and Expo is open March 25-27.

GameStop Shares Soar Following Improved Guidance

Shares of GameStop [GME] surged almost 12 percent in morning trading as the video game retail giant upped its Q4 sales and profit guidance.

GameStop said its total sales were $3.5 billion, a 22 percent increase compared  to the previous year’s Q4. The company expects its net income to be in the range of $1.33 to $1.34 per share, a 17 to 18 percent increase over last year’s profit. GameStop will report its full earnings for the year and Q4 in mid-March.

For fiscal 2009 ending January 30, 2010, GameStop predicts its sales will grow between 10 and 12 percent, and expects its net income to increase between 18 and 22 percent.

GameStop’s used game trade-in model has been a topic of controversy, because neither developers nor publishers see any of the money from GameStop’s high-margin used game sales. CEO Dan DeMatteo credits used game sales for the company’s positive performance, but says there’s more to it the story. “Although our trade-in model is widely known as a driver of new software sales, our exceptional growth is also a function of thousands of conveniently located stores, excellent supply chain management, and the expertise of our associates who operate GameStop stores. Also of note is our US advertising penetration, and the power of our magazine, Game Informer, which is the twelfth largest consumer magazine in America, with over 3 million subscribers. We are energized by the fact that video gaming has gone mainstream, with recent industry data showing that nearly half of new gamers are over 35 years old and 40% are female.”

DeMatteo and other GameStop executives have benefitted handsomely from its strong fiscal 2008. Both he and Chairman R. Richard Fontaine have collected bonuses of $2.4 million each following the banner year, according to a company Securities and Exchange Commission filing. Other executives received bonuses ranging from $300,000 to $900,000.

ESA Names Government Relations Head

The Entertainment Software Association has named Jennifer Manner its SVP for government affairs.

Manner will be responsible for heading the ESA’s federal and state government relations team, which works directly with elected officials and regulatory agencies on behalf of the video game industry.

"The entertainment software industry is faced with a variety of challenges and opportunities at the national level from protecting intellectual property and preserving First Amendment rights to fostering economic development and technological advancement," said ESA CEO Michael Gallagher. "Jennifer's wealth of policy experience, particularly in the broadband space, will serve the ESA and our members well as we work to create a prosperous environment for the entire computer and video game industry."

Manner is a long-time Democrat with expertise in working with both parties, the ESA said. Most recently, Manner was vice president of regulatory affairs at Skyterra Communications, where she was responsible for developing and implementing regulatory and policy strategy for the major hybrid satellite-terrestrial communications company. Prior to joining Skyterra, Manner was senior counsel to Federal Communications Commission Commissioner Kathleen Abernathy. While at the FCC, she advised the commissioner on technology, wireless, consumer and international affairs issues.

Ubisoft to Co-Publish Midway’s Wheelman

In light of its filing for Chapter 11 protection, Midway Games confirmed Internet rumors that it has enlisted Ubisoft to co-publish its next title, Wheelman on March 24.

Wheelman, in development by Vin Diesel’s Tigon Studios, will appear on PlayStation 3, Xbox 360 and PC. The title is generating significant buzz in the consumer press and will feature Diesel’s likeness in the lead role.

"Ubisoft's decision to join Midway in a co-publishing agreement is a gratifying validation of Wheelman's potential,” said Midway CEO Matt Booty. "Ubisoft has a proven expertise at bringing new IP to market, which will allow us to reach a broader consumer segment with Wheelman, while helping Midway to balance the risk profile of our product portfolio.”

SouthPeak Bucks Economic Trend, Increases Profit

SouthPeak Interactive has managed to defy the tough economic odds by  growing its Q2 profit.

The company reported a net income of $1.2 million, or 2 cents per share on revenues of $17.3 million for the quarter, which ended December 31. That compares to a net income of $281,000, or 1 cent per share on revenues of $4.2 million in the previous year’s Q2.

“We attribute the strong financial results to our diversified portfolio, tightly managed costs, and strict supervision of the retail channel and field inventory levels. These results were accomplished in a difficult retail environment, and included a charge for bad debt relating to Circuit City and Pinnacle for approximately $534,000 dollars. We remain poised for strong growth and remain cautiously optimistic about the overall retail environment for our products,” said Chairman Terry Phillips.

Also contributing to the profit boost was “overwhelming demand” for SouthPeak’s MyBaby games for DS, which the company says was one of the best selling games on the platform this past holiday season.

Nintendo Confirms April 5 DSi US Launch

Nintendo has confirmed rampant rumors by announcing that it will indeed  launch its new DSi handheld on April 5 in the US for $170, enraging every parent who recently gave their children a DS Lite for the holidays.

DSi is a new iteration of Nintendo’s wildly popular DS, but will add two cameras: one on the outside and one inside when the unit is flipped open. Besides taking photos, these cameras will give developers a new way for their games to interact with users, Nintendo said. Another change is DSi will lose the port found in DS/DS Lite for Game Boy Advance games, as most gamers have moved on to the technologically superior DS platform, which Nintendo says has a worldwide installed base of 96 million.

Another enhancement is the DSi Sound application, which serves as both an interactive voice recorder and music player that allows users to play with their music while they listen to it. Users can access different audio filters or control the pitch and speed of recorded voice or music files to alter voices or change the tempo of a song. The mic is located between the two screens when the device is flipped open, and there is also a stereo headphone output that lets users listen to music saved on an SD card.
Taking a page from Sony’s [SNE] PSP playbook, DSi will also include the Nintendo DSiWare™ application that will enable gamers to purchase and download software using the system’s built-in Wi-Fi adapter. Nintendo DSiWare games and applications will start at 200 points, or $2.
While DSi-specific titles are in development, the handheld will be backward compatible with “most” DS games, Nintendo said. One of the first titles for the system will be Nintendo’s Rhythm Heaven, which Nintendo says has sold more than 1.6 million copies in Japan. Rhythm Heaven will also be compatible with the original DS.

New Company Offers Low-Cost Development Environment

Game development software companies Digini and Vyk Games have merged to form Blade Games. Terms of the merger were not disclosed.

Digini CEO Tony Garcia will assume the same role with Blade and Vyk CEO Tom Sperry will become the company’s president.

Blade will offer developers—both professional and independent—its low-cost PC/Xbox 360 development software Blade3D as well as digital assets through its Blade Marketplace. The marketplace will be continually updated through a tab within Blade3D.

Blade3D is integrated with the XNA Game Studio 3.0 and is available with price points of $15 per month for hobbyists and students, $30 per month for independent developers, and $100 per month for professional developers.

“As an industry, we must constantly create better tools and more efficient ways to build games. Our merger is a major step in this direction. It provides every type of game developer, from the teenager in his bedroom to the largest studio, a comprehensive tool set and digital asset library not previously available,” said Garcia.

Midway Delisted, Holds Onto Its Cash

Following its filing for Chapter 11 bankruptcy protection, Midway Games [MWY] has been delisted from the New York Stock Exchange.

Midway has failed to maintain NYSE’s rule of keeping an average closing price of $1, maintain a market cap of at least $75 million and latest reported shareholders’ equity of at least $75 million for 30 consecutive days. Midway’s last closing price was 10 cents per share, its market cap $9.6 million, and shareholder equity was a deficit of $113.5 million when it reported its Q3 results in November.

In related Midway news, the company has received approval from the US Bankruptcy Court of its cash collateral in its Chapter 11 filing. The approval will enable Midway to utilize its cash to maintain its business, including salary and expense reimbursement payments to employees.

“Approval of these motions is an important first step in this planned and orderly reorganization, enabling Midway to continue to operate as usual during this process,” said Matt Booty, Chairman and CEO. “We remain confident in Midway’s ability to use this proven process to address our capital structure and explore our strategic alternatives.”

Sin City Developer Close to Going Out of Business

Red Mile Entertainment is struggling to continue its operations after Atari  Interactive terminated its co-publishing agreement for Heroes Over Europe with Red Mile, according to a Red Mile filing with the Securities and Exchange Commission.

The February 11 termination—which Red Mile is disputing—means Atari is no longer making milestone payments that Red Mile needs to continue its operations. Before the termination, Atari was making guaranteed and back-end royalty payments to Red Mile.

On the same day, Heroes developer Transmission Games (formerly IR Gurus) sent Red Mile a termination notice claiming Red Mile failed to make a $281,000 payment under its agreement with Transmission. Heroes was scheduled to ship this spring for PC, PlayStation 3 and Xbox 360.

To stay afloat, Red Mile is attempting to increase its $1 million line of credit with Tiger Paw Capital, which is owned and operated by Red Mile board member Kenny Cheung. Should Red Mile not get that increase or fail to secure new funding by March 31, it is unlikely it will stay in business, it said.

Red Mile’s largest property is its license to develop games based on Frank Miller’s Sin City comic book series. To complete development of this title and Heroes, the company anticipates needing an additional $10 million in the next two to three years. Should it be able to do this, it expects to ship Sin City in fiscal 2012 (which begins April 1, 2011).

Capcom Unleashes Street Fighter IV

Capcom has shipped Street Fighter IV for PlayStation 3 and Xbox 360, the latest in its flagship fighting game series.

"Few videogame series have had such a strong impact on their perspective genres the way Street Fighter has over the decades. Creating a global legacy spanning over twenty years of fighting games, the Street Fighter series has become a pillar in the fighting game genre," said Grant Luke, senior product marketing manager at Capcom.

Street Fighter IV is selling in a standard edition ($60) and collector’s edition ($80).

In related news, Capcom has unveiled its line of branded Visa prepaid cards  that show off some of its most popular properties: Street Fighter IV, Bionic Commando, and Resident Evil 5.

First GTA IV Content Now Available

Take-Two Interactive [TTWO] publishing label Rockstar Games has released its much-anticipated episodic content for Grand Theft Auto IV, The Lost and the Damned, exclusively for Xbox 360.

Available online only through Xbox Live Marketplace, the expansion pack sells for $20 and is the first of multiple episodes promised by Rockstar. Grand Theft Auto IV set a new sales record on the first day of its release last April, generating $380 million between the 360 and PlayStation 3 versions.

High School Musical Returns to Consoles

Disney Interactive Studiosshipped Disney Sing It: High School Musical 3: Senior Year for PlayStation 2, 3 and Wii in conjunction with the High School Musical 3: Senior Year DVD release today.

The game, developed by Zoë Mode, High School Musical 3: Senior Year is being sold in two flavors: with ($40) or without a Logitech [LOGI] microphone ($30). An Xbox 360 release is planned in the near future.

Fallout 3 Takes Gamefly GOTY Honor

Bethesda Softworks’ Fallout 3 took Gamefly’s Sixth Annual Q Award for Game of the Year as judged by the game rental service’s community.

The game, available for Xbox 360 and PC, beat out other perennial favorites such as Grand Theft Auto IV and Gears of War 2.

More than 100,000 votes were submitted from January 19 to February 9 to choose the winners, Gamefly said.

Gamefly Q Awards

Category	Winner
Game of the Year	Fallout 3
PS3 Game of the Year	Metal Gear Solid 4: Guns of the Patriots (Konami)
PS2 Game of the Year	Kingdom Hearts: Re-Chain of Memories (Square Enix)
PSP Game of the Year	God of War: Chains of Olympus (Ready at Dawn Studios)
360 Game of the Year	Fallout 3
Wii Game of the Year	Super Smash Bros. Brawl (Nintendo)
DS Game of the Year	Final Fantasy IV (Square Enix)

Achievement Unlocked: Hideo Kojima’s Career

The Game Developers Choice Awards will honor Metal Gear creator Hideo  Kojima with a Lifetime Achievement Award at this year’s ceremony at next month’s Game Developer’s Conference.

Kojima, who is corporate officer, executive producer and director of Kojima Productions will also be on hand at GDC to deliver a keynote address. The Lifetime Achievement Award recognizes the career and achievements of developers who have “made an indelible impact on the craft of game development, as Kojima has with over twenty years of work on Metal Gear and other notable franchises,” according to GDC organizer Think Services Game Group.

"For years, Hideo Kojima's contributions to game development have broken new ground and inspired the community to think about creating games in never-before-imagined ways," said Meggan Scavio, event director of the Game Developers Conference. "From giving birth to the stealth action game genre to showing game makers how to interact with their players by breaking the 'fourth wall,' Kojima's achievements make him an obvious choice for an award that in previous years has gone to luminaries including Sid Meier, Shigeru Miyamoto, Richard Garriott, Eugene Jarvis, Mark Cerny, Gunpei Yokoi, Yuji Naka and Will Wright."

The ceremony will be hosted on March 25 in the Esplanade Room in the South Hall of San Francisco’s Moscone Center.

Emergent Secures $12.5M in Funding

Middleware supplier Emergent Game Technologies has secured $12.5  million in funding, it said today.

“We are looking very carefully at every investment we make these days,” said Thomas Parkinson, partner at Hopewell Ventures, the firm that led the investment round. “Emergent offers solutions that scale across game budgets, genres and platforms. Further, we believe the new technology.”

Best known for its Gamebryo development environment, Emergent will reveal its new product, promising “development at the speed of light,” at next month’s Game Developer’s Conference.

“As game developers search for options to cut costs and reduce expenses in 2009, more of them will be looking to third-party game middleware companies like Emergent to help cut development time, free up engineering resources and increase efficiency,” said Senior Analyst Christine Arrington of market research firm Acacia Research Group. “Demand for middleware that performs these tasks is likely to remain solid through the tough times ahead and then quickly return to strong growth during the next five years.”

Emergent CEO Geoffrey Selzer said his company has experienced rapid growth over the last few years because it has taken a different approach to the market. “Though the video game industry is weathering the worldwide liquidity crisis better than most, increased financial pressures are intensifying the many difficulties the industry is facing such as bloated budgets, increased complexity of core technology and changing consumer expectations,” Selzer said.

EA Sports Gets In The Outside Game

Electronic Arts [ERTS] and Toy Island will team up to develop a new line of sports equipment that will take EA’s EA Sports label outside.

The products will serve as training devices in baseball, football, basketball, soccer and hockey. Using infrared, motion and equilibrium sensors, the products will serve as a “virtual coach” for aspiring athletes from ages 3-12.

“Our goal is to take the EA SPORTS brand deeper into the fabric of sports, and into new markets that allow more people to unleash their inner spirit of sports and competition,” said EA Sports President Peter Moore.

Mobile Minute: Gameloft Sells 200M Games

While most American game companies take off for Presidents’ Day today, Gameloft saw fit to announce it has sold 200 million games for mobile platforms since 2003.

The company, a spinoff of Ubisoft, said thanks to the popularity of iPhone and iPod Touch, Apple [AAPL] became Gameloft’s largest client last summer. Gameloft’s games can not only be found on Apple’s platforms, but also on 1,200 cell phones and PlayStation Store, Wii Shop Channel, and Xbox Live Arcade.

Meanwhile, Gameloft’s competitor Glue Mobile announced it once again has license to do a game on Hasbro’s [HAS] Transformers property, and will launch Transformers: Revenge of the Fallen alongside the release of the movie of the same name on June 26.

In addition do doing the game for the original Transformers movie in 2007, Glu also developed 2008’s Transformers: G1 Awakening, based on the 80s cartoon, Transformers.

Analysis: January Game Sales Numbers

Demonstrating that the US video game industry is relatively recession-proof, overall sales increased 13 percent last month, according to the latest NPD Group data.

Overall sales for the industry were $1.3 billion in January, up from almost $1.2 billion in the same month last year. Console sales saw the largest increase, climbing 17 percent year-on-year. It’s worth noting that while the data on the chart below does not account for PC game sales. January sales in that category did drop for the second year in a row to $37.2 million, compared to $46.9 million last year, according to market research firm Cowen and Company, which cited NPD numbers. At the risk of sounding like industry shills, why shouldn’t sales be growing? Just because times are tough doesn’t mean Americans still don’t crave entertainment. For about $60, most games give at least 10 hours of entertainment, or $6 per hour. That compares to roughly $50 for a day pass at a Six Flags [SIX] theme park (although it now sells season passes for the same price), $10 for a movie ticket—sans popcorn and a soda—or $3 for a beer at a bar, not including wings or cover charge.

Nintendo’s Wii once again dominated the hardware chart, selling 370,000 more units than its closest competitor, Microsoft’s [MSFT] Xbox 360. Still, 360 managed to sell more units—309,000—than the sum of console sales in the Sony [SNE] PlayStation family, with 304,400 units sold.

Nintendo’s DS sales reaffirm its stranglehold on the handheld industry, with sales more than five times higher than Sony’s PSP. Well-known, critically acclaimed franchises such as Mario Kart and Super Mario Bros. helped in this huge discrepancy (see game sales chart below).

A higher, $90 price tag did not stop consumers from continuing to buy Wii Fit in droves. We’d love to see how many of those Wii Fit sales are conversions from gym memberships. Only time will tell which has the strongest legs, Wii Fit (released May 2008) or Wii Play (released February 2007). Our bet is on Wii Play due to the value it represents by packing in a remote and keeping a $50 price point. The numbers below also include the remote-less $35 Wii Play, as well as Game of the Year editions for other titles (noted with an asterisk).

The January release of Electronic Arts’ [ERTS] Skate 2 gives it a nice head start on the reinvention of Activision’s [ATVI] Tony Hawk franchise, which isn’t due on shelves until Q4. Still, Activision managed to fend off the EA attack in the music genre, with Guitar Hero World Tour taking the no. 7 spot, while Rock Band 2 was nowhere to be found. Perhaps it’s the celebrity-filled TV spots that put World Tour over the top. Our advice? Keep the Heidi Klum spot, but dump the A-Rod/Phelps one stat. Alas, the company has no plans to do so since the A-Rod/Phelps ad is nearing the end of its run anyway.

Mad Catz Posts Q3 Loss

Accessory maker Mad Catz Interactive’s [MCZ] bottom line dropped $30.2  million to put it in the red for Q3.

The company reported a net loss of $26.9 million, or 49 cents per share on revenues of $40.8 million for the quarter, which ended on December 31. That compares to a net income of $3.3 million, or 6 cents per share on revenues of $34.4 million in the same quarter last year.

Increased inventory reserves, higher royalty expenses, increased costs due to added product development and higher shipment costs contributed to the loss, Mad Catz said. The inventory reserve provisions were necessary “due to the uncertain state of the economy and the retail industry,” said President/CEO Darren Richardson. “Going forward, we expect gross profit margins to be no lower than the range experience in our latest three and nine-month periods.”

Those higher royalties can be attributed to Mad Catz’ licensing deals with companies such as Fender (for Rock Band instrument controllers) and Nintendo, which put its stamp of approval on Mad Catz’ full line of Rock Band accessories.

Microsoft to Enter Retail Business

Microsoft [MSFT] has been dueling Apple [AAPL] for years, and now it wants to do it with bricks and mortar.

Microsoft said today it will open company-branded stores and has named Wal-Mart [WMT] veteran David Porter as corporate VP of retail stores. Porter’s job will be to define the time frame, locations and specifics for the stores.

While Microsoft was mum on which of its products it would carry, it did mention Porter would be working closely with leaders of existing retail programs in its Entertainment and Devices Division, which includes Xbox 360, Zune media player and Windows Mobile devices.

In his time with Wal-Mart, Porter wore several hats, with the most recent being VP/general merchandise manager of entertainment. He will report to work on Monday.

NCsoft’s Sales Up, Profit Down

Korean MMOG developer NC Soft’s annual profit dropped 40 percent due to marketing expenditures on its recently released Aion for PC in Korea.

The company reported a net income of $19.5 million on revenues of $248.6 million for the year, which ended December 31. That compares to a net income of $32.1 million on revenues of $235 million the year before.

NCsoft is pinning high hopes on its next big RPG, Aion, which launch in Korea in November. The title will ship to other regions of the world this year. Despite its late release, sales of Aion “exceeded expectations” and helped NCsoft post higher sales numbers for 2008.

"We anticipate full scale growth in 2009 based on the successful launch of Aion in Korea and the upcoming launch of the product in territories worldwide,” said CFO Jaeho Lee.

NCsoft’s home country is still its best for sales by far. Its Korean revenues for Q4 were $39.7 million versus $8.7 million in the US.

Activision Gets Chaotic

Activision [ATVI] has inked a deal with 4Kids Entertainment [KDE] to publish a game based on 4Kids’ trading card game, Chaotic.

The video game of the same name will appear on Wii, DS, Xbox 360 and PlayStation 3 this fall.

"Chaotic was the first trading card franchise specifically designed to connect competition with online interaction, so it's a natural fit for the property to evolve into videogames," said Alfred R. Kahn, chairman and CEO, 4Kids Entertainment.

Sony Ships 50 Million PSPs Worldwide

50 million PSP units have been sold-in worldwide as of January, Sony  Computer Entertainment said today. Sell-in is the number of units sold to retailers, while sell-through refers to the amount sold at retail to consumers.

Sony’s handheld system, which debuted in Japan in December 2004, North America in March 2005, and September 2005 in Europe, began as a jack-of-all trades device. Consumers could buy games and movies on Universal Media Discs and take them anywhere. Ultimately UMD movies failed, and Sony has perplexingly not come up with a solution for customers the masses to get movies on PSPs, despite its Wi-Fi and Memory Stick capabilities.

To Sony’s credit, it has opened its PlayStation Store up on PSP since its release. Consumers can now download classic PlayStation and PSP titles directly to the handheld. While consumers can obtain movies and TV shows for PSP via a PC or PlayStation 3 download, they are still required to attach their PSPs to the respective device to get the video onto the handheld.

PSP’s only other competitor, Nintendo’s DS, has an installed base of 96 million worldwide, according to Nintendo numbers.

Square Enix Cuts Annual Forecast

Square Enix, fresh off its announcement it has made a bid to acquire Eidos, has cut its forecast for sales and profit for the fiscal year ending March 31.

The company now expects a net income of $101.7 million, or 91 cents per share on revenues of $1.6 billion for the year. That compares to its previous forecast, announced in November, of a $132 million net income, or $1.15 per share on revenues of $1.8 billion.

Square blames the lowered forecast on its underperforming arcade and offline game business. Also contributing is the delay of Dragon Quest IX for DS, which has been delayed from a March 28 release to July 11 in Japan, according to Square’s Japanese website.

Square Enix Makes Bid for Eidos

Square Enix has made a play to acquire all shares of UK-based Eidos for a  relatively low $120.2 million, Square said today in a statement.

Under terms of the deal, Eidos shareholders will receive 45 cents per share. The offer represents a 258 percent premium based on Eidos’ 9 pence (12 cents) close on the London Stock Exchange on January 14, the day before Eidos announced it received an offer.

“Square Enix believes that the acquisition of Eidos represents a highly attractive opportunity for the Square Enix Group to create further value for [Square’s]  shareholders,” Square said.

The deal would give Square access to Western-friendly franchises such as Tomb Raider, Hitman, Deus Ex and Thief. While it’s safe to say Square already has hits in the likes of Final Fantasy and Kingdom Hearts, almost of its popular titles in the West have been role-playing games, which have a loyal but niche audience.

"The total cost is relatively small, essentially the cost of buying a middle of the road developer, so I would say it's a good deal for Square Enix. My view is that they are buying the company for the existing franchises, so I wouldn't expect to see any of them killed off,” Wedbush Morgan analyst Michael Pachter told UK magazine Edge.

Square expects Eidos shareholders to vote in favor of the buyout next month, and sees it being a done deal by the end of April.

(Conversion: 1 dollar=70 pence)

Midway Files for Bankruptcy Protection

Midway Games [MWY] has filed for chapter 11 bankruptcy protection in a  Delaware court after concluding it is unable to repay its debt.

The company was required to repay $150 million in repurchase obligations by today and February 19 following its sale for $100,000 in November by Sumner Redstone. Filing for chapter 11 will enable Midway to reorganize while it tries to sustain its business.

Midway is seeking approval from the court for a variety of first day motions enabling the company to continue managing its operations in the ordinary course. These motions are typical of the restructuring process, and approval is regularly granted, the company said.

“This was a difficult but necessary decision,” said Midway Chairman, President and CEO Matt Booty. “We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives. This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure.”

“Midway enters this process with strong underlying fundamentals, as evidenced by solid fourth quarter sales that exceeded expectations in spite of a challenging retail and general economic environment,” Booty added. “Overall, Mortal Kombat vs. DC Universe sales are approaching 2 million units shipped, TNA Impact has shipped approximately 1 million units, and our Game Party franchise has sold close to three million units in total.”

Shares of Midway were down 36 percent, or 9 cents in morning trading.

Majesco Launches New Wii Label

Majesco Entertainment will launch a series of motion-based Wii games  under a new label, Go Play.

The first title in the series will be Go Play Lumberjax, due this spring. Additional titles, Go Play City Sports and Go Play Circus Star will ship this summer and fall, respectively.

In an attempt to get families off the couch and encourage physical activity, Majesco’s Go Play Lumberjax will let players use the Wii remote to chop, climb, saw and logroll to victory in more than 15 outdoor events. Go Play City Sports features six classic games played on street "courts" filled with manhole covers and parked cars. Finally, Go Play Circus Star lets players perform for big top crowds in 15 different games. All three of the games will include support for the Wii balance board.

Activision Ships New Guitar Hero Peripherals

Activision Publishing [ATVI] is shipping its standalone guitar controllers and drum kits for its Guitar Hero World Tour.

The company is pitching the peripherals to existing owners of World Tour as upgrades, since the drum kit is wireless and the guitar controller features a touch-sensitive slide on the neck. Both the kit and the controller will be on shelves February 15.

Sega Gets Crossover Crazy

Sega will continue its crossover of Mario and Sonic and publish Mario & Sonic  at the Olympic Winter Games and take on a new crossover in its portfolio, Aliens vs. Predator.

The new Mario & Sonic title will ship late this year for Wii and DS, and is in development by Sega of Japan. The original Mario & Sonic at the Olympic Games for Wii and DS sold more than 10 million copies worldwide, Sega said.

Aliens vs. Predator (working title) will ship in early 2010 for undisclosed platforms (although PlayStation 3 and Xbox 360 are safe bets). UK-based Rebellion Developments, which made the original Aliens vs. Predator for PC in 1999, will once again take on development duties for the new title.

EA, Hasbro to Launch Preteen-Targeted Website

Electronic Arts [ERTS] and Hasbro [HAS] will launch an a website based on Hasbro’s Littlest Pet Shop this fall, the companies said today.

The Littlest Pet Shop Online will allow girls to play and customize their favorite pets, connect with friends, and participate in online games, activities and events.

“Preteen girls spend an enormous amount of time online and are actively seeking something that they can connect and have fun with in a meaningful way, said EA Hasbro GM/VP Chip Lange.

EA released five Littlest Pet Shop games last year for Wii, DS and PC and sold 2.8  million copies worldwide, it said. In the holiday quarter, Littlest Pet Shop was a top-five title on the Nintendo DS in Europe and North America, based on NPD Group data. A sixth title, Littlest Pet Shop Spring for DS, is due next month.

Blockbuster to Debut Online Game Rentals in Q2

Blockbuster [BBI] will go head-to-head with Gamefly for online game rental market share, revealing its plans for the service today.

Blockbuster will start a pilot program in select areas next quarter in which its Total Access movie rental customers will be able to rent games as well as movies through the mail as part of their subscription plan. If Total Access customers return the game and rent another one at the store, they will receive half off the rental.

When customers opt to rent a game, they will be charged a flat $5 fee on top of their normal subscription charge, a Blockbuster spokesperson told The Game Trade Journal. If the customer does not rent any games in a given month, there will be no charge. Customers will only be charged more than the $5 if they rent additional games through their local store.

Customers will not have the option for a game-only plan, the company told GTJ, citing Blockbuster research indicated subscribers preferred an integrated plan for movies and games.

Blockbuster’s goal is to offer the games-by-mail rental service by the second half of the year, it said. The movie rental retailer, which also does by-mail movie rentals, has lost share in recent years to Netflix [NFLX]. Currently, Netflix does not rent games.