Anyway, there’s a few news items to go through today and it also happens to be my birthday as well, so yeah!

Let’s get started with some copyright news. The Ubisoft DRM controversy keeps on going this week with a couple of related news stories as well. With Assassin’s Creed II released, the Ubisoft DRM servers came under some serious test, and unfortunately it failed.

Ubisoft blamed a DDoS attack for the server downtime, which caused paying gamers to not be able to play the games that they paid for, while those pirating it weren’t affected. Ubisoft still says that the only complete version of the games are the legitimate ones, since some files or content can only be accessed through Ubisoft’s servers. I think it’s safe to say that the games hasn’t been completely cracked, but it might also be safe to say that it will be sooner or later. But that’s all beside the point. The point is paying customers weren’t able to play the games because of a situation that Ubisoft hadn’t anticipated (the server attack), and there will be plenty of situations that Ubisoft hasn’t and won’t be able to anticipate. Is this really fair to gamers? Following the Ubisoft controversy, a lot of other game companies have come out with their opinions on the matter. Futuremark, the makers of 3D Mark and the upcoming game Shattered Horizon, says DRM that “gets in the way” is only going to harm the game companies because “it’s not like there is a shortage of other games demanding my attention”. How many gamers have decided to buy some other game because they don’t want the hassle associated with playing Silent Hunter 5 or Assassin’s Creed II (and for the latter, they can still get the console version if they really want to play it).

Steam's popularity shows that there are still some kinds of DRM people might accept

Valve’s Gabe Newell, the guy behind the Half-Life series, and also the successful Steam platform (which has just been made available for the Mac, finally) also says something similar. While accepting an award at the Game Developer’s Choice Awards, Newell believes game companies should adopt a ”what have I done for my customers today?’ attitude. Basically, Newell thinks DRM is a negative that takes something away from games, and if you do that, then you better also give them something extra to make up for it, which is what the Steam platform attempts to do. But if one goes overboard with DRM, as Ubisoft appears to have done, then it’s going to take a lot of positives (more than just online save games) to be able to justify something like this. The Steam platform does have DRM as well, but it seems to offer enough for paying customers to accept the limitations. The often discounted games might also help gamers ignore the inconvenience of needing the Steam client and having to be online before playing a game.

There’s a real battle in the UK over the future of the Internet, with the music industry being represented by the BPI who wants three-strikes, ISP monitoring and all that good stuff. The ISPs, and pretty much everyone else, don’t want it. In a new tactic, the BPI is trying to entice ISPs to get on board by luring them with the possibility of huge amounts of extra revenue from working with the music industry and selling legal music. I don’t see any problem with this, except why do we need three-strikes to make this a possibility, since this is something the music industry should have been working on ages on (and perhaps if they did, piracy wouldn’t be such a big problem now). ISPs are not impressed and one spokesman questioned the ‘value of such insight from an industry which has failed to acknowledge the impact of new technology on its own business models’. Touché. The music industry has been slow to adapt to the new digital and Internet revolution, there’s no greater evidence than the fact that the most popular online music store is being owned and operated by a computer company, Apple, and not one of the big music labels. But a new study also shows that even with the dominance of iTunes, there’s still a significant number of people that don’t know where to buy music online legally. While most know of Amazon or iTunes, 20% didn’t know any online stores. This isn’t to say that the cause for piracy is due to people now knowing where to buy music, because people who pirate will always pirate, and people who buy will find a way to do it. But it does highlight that the music industry has plenty left to do before it can declare that they’ve done all they could and that it’s time for the government in intervene with harsh legislation. The music industry was quick to try and discredit the new study, by saying their own study shows that 96% of Internet users were aware of either Amazon or iTunes.

Hadopi, the French agency overseeing three-strikes, only regulates P2P networks for three-strikes

But does three-strike actually work to one, deter pirates, and two, increase revenue? The French have had three-strikes for a while now, and the results are not promising. Piracy is actually up three percent compared to before three-strikes was introduced. While noting that the habits of downloaders have changed, less people now use P2P and more use HTTP or streaming sources to get their pirated content (these sources are not covered by three-strikes), the overall number of cases of piracy has actually increased. It’s also worth noting that secure P2P means that it’s hard to track just exactly what is being downloaded and by whom, and so the figures could be higher depending on how the study was conducted. In any case, it definitely shows that three-strikes is not the cure all solution that the music and movie industries thinks it is. The same study also found that 50% of people who pirate stuff also buys stuff online, and of course if all of these people are kicked off the Internet by three-strikes, then that’s going to mean a direct revenue drop for the music/movie industry, not to mention other online based industries. The reality is that many users see purchasing and illegal downloads as two possible ways to get what they  want, and it’s up to the music/movie industry to convince them that one way is better than the other. Instead, they’re trying to punish these users for choosing the wrong option, and all that does is to close off both possible ways to get content. Pricing and convenience will win this war, not bannings.

And then there’s also the theory that even illegal downloads help sales eventually. The number of people who have been introduced to new music, new artists, new TV shows, new games, through pirated content at first and then leading them to buy more stuff, cannot be underestimated. Pirated content offers “try before you buy” and sometimes that’s the only way to get new customers. Then there’s also the Internet hype effect, and the more people that talk about the content (and logic says that the more pirated the content is, the more users there are that have experienced it, and therefore, the more discussions there will be about it), the more hype it generates and that can help sales. Of course, bad content might get found out faster, and I sometimes wonder if that’s what really the studios and labels are worried about, that bad content are being “filtered” out too quickly and they may actually be forced to produce good content consistently in the future. For the movie studios, the last few years has been bad ones in terms of piracy, but the MPAA was happy to note this week that global box office receipts have jumped a massive 30% since 2005, and 2009’s global earning was just shy of the 30 billion dollar mark, a new record for the industry. So is piracy really hurting the industry at all? We know that increases in box office receipts may have more to do with 3D screenings that are becoming standard for big releases, and that if piracy affects anything it will be home video sales. Home video sales have dropped, although with Blu-ray revenue increasing, studios are relatively confident in this area. But I just don’t believe the Internet has had no effect on box office receipts, since it has had an effect (both positive and negative) on everything else in our lives.

Let’s move onto Blu-ray and HD news. Manufacturers are rolling out their 3D TVs and Blu-ray players in droves, but the cost of getting 3D for your home may just be too high for some, if not all.

3DTV is going to cost a lot, as you'll need a new TV, new Blu-ray player and new 3D glasses

For one, you’ll need a new TV. One thing that has been confirmed is that 3D capable TVs will carry a premium over standard ones, up to 50% more expensive for Sony Bravias for example. And then you have the need to upgrade your Blu-ray player to one that is capable of 3D, although you can skip this requirement if you have the PS3 (another reason to recommend the PS3 as the Blu-ray player of choice). But if you can’t skip it, at least 3D capable Blu-ray players should not carry a huge premium over standard ones (although you might need to buy a new HDMI cable as well). Then you will have to get glasses. Most of the systems use active shutter glasses, which means expensive glasses that cost upwards of $150 per pair. Some of the 3D TVs will come with a few sets (for 50% more, you’d expect them to come with at least 4 pairs), but if you want the whole family to enjoy a 3D nights in, then be prepared to pay for it. And then lastly, you’ll need to get 3D movies to feed your 3D system, which has now cost you several thousand dollars probably. This may mean that you’ll need to double dip and buy new versions of recent movies that have been released on Blu-ray as 2D versions only. And knowing studios, they’ll release a 2D version of the movie first on Blu-ray, and then hope for the double dip with a 3D version later on, which is exactly what Fox is planning with Avatar. And with plans to re-release classics like Star Wars on 3D again, be prepared to buy some of your movie collections again (again (again)) if you want to watch it in 3D.

Moving onto online content. The war between HTML5 and Flash is intensifying. A benchmark review was attempted recently to find performance differences between HTML5 and Flash, but it appears to have failed because compatibility meant that it was almost impossible to compare apples and apples. The problem is that the latest beta of Flash has GPU assisted decoding, but not on all platforms, and then you have HTML5, in which some browsers will support H.264 content, while others like Firefox won’t. It would be nice if a proper standard like HTML5 can supersede the need to install third party plugins like Flash, to allow all browsers to play interactive and video content out of the box, but if HTML5 doesn’t set a standard for whether H.264 support is mandatory or not, then it’s next to useless and I’d rather have Flash, which promises universal support (even if some won’t have GPU assist enabled). My opinion is that HTML5 must make H.264 mandatory. I know there are licensing issues with H.264, and more needs to be done in this area to ensure free and open source browser makers can continue to do their excellent work, but H.264 has industry support and that’s crucial in terms of performance and compatibility. It would be nice of Ogg Theora or another open source format become widely adopted, but it just hasn’t happened and it’s unlikely to do so unfortunately. Perhaps if someone like Nvidia added Theora acceleration support to their GPUs, then the situation might change.

Speaking of Nvidia, they’ve not had a good time in the graphics card market recently, with ATI/AMD dominating with the Radeon HD range in both the price and performance criteria. Then there was the whole failing GPUs in Macbook disaster a year and half ago. Now it seems Nvidia’s new driver is killing GPUs. Those that have upgraded to 196.75 need to perform a downgrade immediately, or face the possibility of having their GPU, or even mothergboards, fried due to overheating. Nvidia has since removed the offending version from download, and has urged users to downgrade as their soonest convenience.

And finally in gaming, with Sony officially naming their Wii like motion controller, the PS3 Dildo Move has been in the news this week. Will it kill the Wii? What about Natal? And why does it look like a dildo?

The answer to all these questions might be a simple “wait and see” (except the last one, since the answer to that is it’s a combination of the need for the strobe light to interact with the PS3 Eye Toy and some unfortunate design decisions). It’s easy to see why it can kill the Wii, with the PS3 superior 3D graphics and more accurate controller bringing us what we think the Wii 2 will be like. It’s also easy to see why it will fail, since failure is exactly how you would describe the efforts of third party game developers when it comes to taking advantage of the Wii. Can Sony make fun games like Nintendo seems to be able to do in their sleep?

The PS3 controller now has an official name, the PS3 Move

For the Natal question, again, it’s far too early to say anything about it. For one, we don’t know what kind of games will benefit from Natal, and we still don’t even know if the whole concept works, due to issues with lag and whatnot. Obviously, the controller-less Natal seems a far bigger leap than the PS3 Move, but bigger leaps can succeed like the Wii or fail like the proverbial Virtual Boy. If it does work (that is, if the lag issue can be resolved), then it would be easier to market than the PS3 Move, which for the average Joe, seems too much like the Wii (even though it’s not). Some have suggested the lag is around 0.1 seconds on average, but others have likened it to what the original Wii remote was like when people play tested it, which I guess worked out just fine for Nintendo. I think for Natal to succeed, it needs integration with the traditional controller. Instead of making games that require you to use the Wii-mote, or the Move all the time, Natal’s camera system and the ability to map your body movements, plus facial and voice recognition should allow you to hold the good old Xbox 360 controller and then use body/limb movements, and voice controls, to enhance the normal gaming experience. Think taking penalties during football/soccer games. Throwing grenades in a FPS. Navigating the Xbox 360 interface like your garden variety Tom Cruise. Giving competitors the finger in a racing game, etc. The possibilities are endless!

But if I had to use the Wii-mote or the Move or Natal to play traditional games that already work perfectly fine with a controller, then I’m not really interested in that, since if it works, it works and there’s no need to reinvent the wheel.

That’s it from me this week. Off to enjoy what’s left of my birthday today. See you next week when I’ll be older but definitely not wiser.

The figures for US sales in February 2010 are below, ranked in order of number of sales (February 2009 figures also shown, including percentage change):

• DS: 613,200 (Total: 40.5 million; February 2009: 588,000 – up 4%)
• Xbox 360: 422,000 (Total: 19.4 million; February 2009: 391,000 – up 8%)
• Wii: 397,900 (Total: 28 million; February 2009: 753,000 – down 47%)
• PS3: 360,100 (Total: 11.8 million; February 2009: 276,000 – up 30%)
• PSP: 133,400 (Total: 17.1 million; February 2009: 199,000 – down 33%)
• PS2: 101,900 (Total: 45.4 million; February 2009: 131,000 – down 22%)

NPD February 2010 Game Console US Sales Figures

NPD Game Console Total US Sales Figures (as of February 2010)

My prediction from last month was:

There are some big titles being released in February, several that will help the PS3 more than the Xbox 360, including the platform exclusive Heavy Rain, and while it’s no longer exclusive, Final Fantasy XIII should have a bigger following on the PlayStation platform than on the 360. As a result, I expect the PS3 to outsell the Xbox 360 at the very least and maybe make a run on the Wii. BioShock 2 should do well on the Xbox 360, but the usual Nintendo Wii titles should also be in the top 10.

I think the only thing I got right was that Bioshock 2 on the Xbox 360 did well, and relatively good sales for Heavy Rain. I didn’t even get the Final Fantasy release date right, so it’s best to just forget my prediction and move on (please?).

There was little chance that I would have gotten this month’s hardware sales order right. The Xbox 360 outselling both the Wii and the PS3 was totally unexpected, to be honest. Both Nintendo and Sony have blamed stock shortages for the problem, and a quick browse on most online stores at least confirm the PS3 250GB being sold out for quite a while now. I can sort of understand the Wii having trouble with stock, since it had a monster December, but January was relatively weak in sales and usually stock problems pop up then and gets fixed in February. For the PS3, sales have been much better than last year and I can see why Sony would not have planned for the sales increase with production increases. But still, if Microsoft can meet demand, despite selling more consoles than the PS3 in the last two months, then you have to say for Sony (and Nintendo) that it was an opportunity missed. I might also guess that Sony might be keeping supply short deliberately so that they have enough units to ship out in March, when Final Fantasy XIII is actually released (not February, as I had thought last month, for some reason).

Looking at the year on year figures, the DS, Xbox 360 and PS3 all recorded growth, while the rest fell. The Xbox 360 has consistently had year on year growth, albeit marginal, and that’s quite a feat and Microsoft has the luck of having key game releases spread out evenly to allow this to happen (for example, Modern Warfare 2 came just at the time when it look like the Xbox 360 was running out of steam when faced with superior competition in the form of the price reduced PS3 Slim). The PS3’s growth can be largely attributed to the Slim/price cut, and also the fact that it was doing horribly last year (and the year before). As I showed last month, while the year to year growth for the PS3 was a high 30%, comparing 2010 to 2008 only yielded a 28% sales increase (because February 2009 was actually worse than February 2008 for the PS3). That’s a 28% sales increase in two years, which is not that good at all, especially considering the fact that Xbox 360 sales grew by 66% in the same time period (and as I noted last month, there was a 45% growth for the Xbox 360 comparing January 2008 and 2010 figures, with the PS3 only recording a negligible 3%). The PS3 should be doing a lot better than it still is, but maybe we’ll see that for the rest of the year, as the PS3 has some really high profile exclusives (or semi-exclusives) lined up.

Looking at the red figures, the decline in year on year for the Wii is worrying, even with Nintendo’s assertion that stock shortages were the reason. The Wii has been consistently doing worse the a year before, and has done this for most of 2009, so while February was especially worse due to stock issues, it still would have been a red month for the Wii without the stock issues. Of course, what’s happening with the Wii is almost the opposite of the PS3, whereas the PS3 had a bad 2008/2009 and so it was easy for Sony to record growth, the Wii had a great 2008/first few months of 2009 and so it’s really hard for them to avoid year on year declines. Things should stabilise for the Wii around April, I feel. The PSP and PS2’s decline slowed a bit in February, particularly the PS2, but the PSP is irrelevant now compared to the DS.

Let’s move on to software. The biggest hit of the month, as expected, was Bioshock 2. The fact that the PS3 port didn’t even rank in the top 10 is a bit of a surprise, it was 12th and sold nearly 3 times fewer copies than the Xbox 360 version. The fact that the original Bioshock was a Xbox 360 exclusive may have something to do with it, and expect a similar, but not as extreme, scenario when the formerly PS3 exclusive Final Fantasy XIII is released in March. Another reason could be because buyers had to choose between Heavy Rain and Bioshock 2, and many chose the former instead. Modern Warfare 2 is still holding up in the sales charts, again showing how amazing it has done since release. Last month’s hit, Mass Effect 2, is still doing relatively well. Another surprise is the Wii hit, Just Dance, which somehow managed to increase in sales. It seems to be getting popular and popular! Another interesting situation with Dante’s Inferno, in which the PS3 version outsold the Xbox 360 version – again, expect the PS3 version of FFXIII to do the same next month (although the PS3 having an exclusive edition of the game might have helped). And lastly, we have the critically acclaimed PS3 exclusive Heavy Rain coming in at 10th. Not great, considering how Mass Effect 2 (another console exclusive) did last month (and this month) and how Uncharted 2 did on the same console, but both were sequels which are easier to sell. But as many have noted, Heavy Rain was released towards the end of February, and so it was at an disadvantage compared to most of the other titles. This isn’t the first time Sony has done this with a platform exclusive, by releasing it towards the end of the month as opposed to giving it a whole month to gather sales. I don’t know what is the reason behind this, but they didn’t do this with Uncharted and it managed a number one, but they did it with inFAMOUS and I firmly believe that it could have ranked higher had it been released just a bit earlier. They also did this with Killzone 2, again costing it a few places in the charts perhaps. But I doubt Sony cares too much about the monthly NPD rankings, so games gets released when they get released, I suppose. For Nintendo, New Super Mario Bros. continue to rank, as does Wii Sports Resort, but some of the other usual entries, like Wii Fit Plus or Mario Kart, have been pushed out of the top 10. Overall, the Xbox 360 had the most titles in the top 10, and had 42.6% of sales. The Wii was second with 3 titles and 34.8%, and the PS3 did relatively well with also 3 titles (the equal most ever?) and 22.6%.

Here’s the complete list of the top 10 software sales:

1. Bioshock 2 (Xbox 360, Take-Two) – 562,900
2. New Super Mario Bros. Wii (Wii, Nintendo) – 555,600
3. Call of Duty: Modern Warfare 2 (Xbox 360, Activision) – 314,300
4. Just Dance (Wii, Ubisoft) – 275,400
5. Wii Sports Resort (Wii, Nintendo) – 272,500
6. Call of Duty: Modern Warfare 2 (PS3, Activision) – 252,800
7. Mass Effect 2 (Xbox 360, EA) – 246,500
8. Dante’s Inferno (PS3, EA) – 242,500
9. Dante’s Inferno (Xbox 360, EA) – 224,700
10. Heavy Rain (PS3, Sony) – 219,300

It’s time to make a prediction. I find it hard to make one for hardware sales because of the stock shortage issue, but if I had to go out on a limb, then I say the PS3 is second, behind the DS, and above the Wii and Xbox 360. I think the Xbox 360 will come fourth, with the Wii recovering a bit. The reason I say the PS3 is going to top the other home consoles is because of two things. One is called Final Fantasy XIII, the other is called God of War III. Having two huge releases in the same month should help hardware sales, but I wonder if it isn’t better to separate these two titles, which might get into each other’s way in terms of vying for gamers’ pocket money. But what do I know. In any case, there aren’t too many new releases for either the Xbox 360 or the Wii, so Sony could really clean up in March.

See you next month.

In copyright news, Ubisoft’s new DRM, which was the reason why I wanted to write a blog on PC gaming DRM, has officially released the first game, Silent Hunter 5, that uses the new “constant Internet connection required” DRM system.

"Permanent Internet Connection Required" - It's always not a good thing when you have to put a huge warning sticker on the box of a game

Unfortunately for Ubisoft, their new, expensive, controversial DRM system was cracked in less than 24 hours. Ubisoft issued an immediate denial that their DRM system had been cracked, saying that while it had been cracked to the extent that the game now works without constant online verification, certain sections of the game was still locked. Ubisoft also quickly released a patch to fix several issues, and to no doubt make the hack ineffective, but the patch it self was cracked in even shorter time. And no doubt, the certain sections that haven’t been cracked will be given time. It is interesting reading Ubisoft’s own FAQ on the new DRM system, which I also referred to in my PC gaming DRM blog, when asked what will happen if they cease operation of their DRM authentication servers, which then makes these games unplayable. Instead of saying that they don’t plan on to ever cease operations, which would be a lie anyway, they said that if that happens, they’ll release a patch to make these games playable without the DRM server. Which means if Ubisoft can release a patch that removes the DRM checks, then so can hackers, so Ubisoft’s insistence that their DRM can’t be hacked is, by their own words, not possible. And yet, legitimate consumers are the ones that are most affected by the badly designed DRM, and just how many have used it as a reason, or excuse, to go down the illegal route, we’ll never know.

The controversial ACTA global copyright treaty, being discussed in secret, has had yet more leaks that reveal just what each country at the negotiation table are trying to get out of the treaty. Before we get to the leaks though, I would just like to address the secret nature of the negotiations. Sure, these type of things goes on all the time and nobody really cares, and for the most part, the ACTA negotiations are only slightly more interesting than watching paint dry. But there are some important things being discussed that will affect all Internet users, and it’s a shame to see the whole thing being kept secret, even given the numerous leaks. It appears some of the European countries wanted the secrecy, the US is citing national security, although nothing so far has suggested anything of that sort being discussed (it’s hard to keep national secrets when you’re in discussion with so many other countries). My guess, and it is purely a guess, is that it’s being kept secret because they don’t want a public backlash. And that’s a scary thing, that governments are conspiring to keep ordinary people out of it because people won’t like it.

Anyway, back to the leak. The US negotiators, with the RIAA/MPAA whispering in their ears no doubt, are pushing hard on various issues including making other countries adopt the severely flawed US DMCA. Other issues include ISP monitoring, three-strikes and all the nasty stuff “people” don’t like. But the push for US style DMCA has met with some resistance. New Zealand also questioned why Internet links can be considered copyright abuse, in that if you operate a website that has a link to another website that had pirated stuff on it, then you’re also liable for copyright infringement. On one hand, this is done to attack torrent websites like The Pirate Bay, which don’t actually link to pirated content, only to files that then link to the content. And there are also aggregator websites like isoHunt that then links to The Pirate Bay and other torrent websites. So it’s understandable why the copyright holders, which are the real powers behind the talks, want to make even linking illegal. But the problem is that this also puts search engines like Google into the same category as sites like isoHunt, since it’s quite easy to find torrents on Google (not quite as easy as say on isoHunt, but certainly not impossible). But it’s unlikely that Google will be sued because of this, but isoHunt will/has. And then there’s user submitted links, and whether for example if someone posts a comment for a blog post that contained a link to pirated content, then whether it’s the blog or the comment poster that is liable. The flow of responsibility has to stop somewhere. If site A is hosting illegal contents, then site A should be responsible, and not site B that links to site A. Because if site B is liable, then what about site C that links to site B, and site D that links to site C and so on. I think it just shows that most legislators don’t really understand how the Internet really works, and they are being easily convinced of this and that by powerful lobby groups, who themselves don’t fully understand the Internet and in general, the digital revolution. And so we, the people, have to suffer for it.

Most of the resistance seems to coming from Europe, and in the UK, the House of Lords are offering some resistance to the government’s proposed changes to digital copyright laws, but their alternative solution leaves much to be desired as well. The Lords are largely objecting to a clause which will allow ministers to bypass the parliament and implement new copyright laws as they see fit. Without public consultation, without a vote, straight from Hollywood’s lips to legislation. The government says that this is necessary because of the fast moving nature of the Internet, but no matter how you spin it, it just doesn’t have a place in a democratic government. The Lords’ proposed compromise is to allow the banning of entire websites on allegation of piracy, which is not going down well with consumer and Internet groups. More evidence of legislators not really understanding the full consequences of their actions in relation to the new digital world. The harm they can do to the digital economy is one thing, but it’s also the potential that they’re not seeing and we’re all missing out on. There are many things that would open up so many opportunities, but fear means that instead of trying to embrace change, they’re doing everything they can to avoid it.

Also in the UK, the group that regulates lawyers in the UK are taking action to stop law firms from flaunting copyright law to make a quick buck by sending infringement notices and demanding settlement fees to private individuals, whose IP address had been identified as one that participated in the download of something illegal. I’ve previously reported on the activities of law firms such as Davenport Lyons and recently, ACS:Law, that prey on those who do not want legal action and so pay up promptly, even in cases when they were sure they didn’t download anything illegal. Especially if the claimed download is pornography. Apparently, the letters sent out say that failing to secure one’s own Internet connection still makes one liable (that is, if your Wi-Fi was hacked and somebody used it to download pirated porn, then it’s still your fault), which is not true, and this could get them in big trouble with the regulators. Right now, it’s only two Davenport Lyons partners that’s been investigated, but DL has already withdrawn from these types of activities, and so ACS:Law will be next. DL pulled out rightly it seems, albeit probably too late to avoid issues with the regulator, and any law firm that participates in these type of activities is best described as a law firm for ambulance chasers, in my opinion.

This is probably the last time I will get to re-use this RealDVD screenshot

One of the things that I think is a missed opportunity is with the digitizing of movie collections, for which a legal solution simply does not exist, other than to repurchase your entire movie collection, often in a inferior digital only format. Hollywood’s determination to kill off anything that allows this to occur has been well documented. This week, they’ve managed to kill off RealNetworks’ RealDVD, which promised to allow people to convert their legally purchased DVDs to a fully digital, disc-less, format (with additional DRM to prevent online sharing). RealNetworks settled the case, admitting defeat and paying costs and will refund all purchasers of RealDVD. That’s a real shame. Not so much that RealDVD is dead, because it never really amounted to much, and the additional layers of DRM tied the digital “rips” to RealDVD’s software, which because it takes one relatively open format like DVD/MPEG-2, and turn it into a proprietary format that Real controls, means that it’s practically useless. However, it is the idea that Hollywood studios won’t allow DVDs to be copied in any way, that makes me angry, because there are a lot of legitimate reasons why someone would want to do it. Being digital, movies are easy to store and easy to transport. They’re also easier to catalogue, and when coupled with one of numerous media hub solutions out there, it makes finding and watching movies so much easier. The same reason why people now prefer MP3s to CDs, if you will.  Hollywood’s perceived danger here is that if such a system is not implemented well, it will allow “rent and rip” piracy (renting DVDs, ripping them, and returning the discs), or it will somehow make it easier to pirated movies online (which is hard to achieve, considering how easy it *already* is). These may be real problems, but that’s for Hollywood and their technical people to solve. You can’t deny your customers a much wanted and needed feature just because a minority of them might take advantage of holes in your system to do something they can already do so easily today. Keep on denying people, and people will find a way, regardless of whether it technically breaks the law or not. Hollywood might now turn a blind eye to these kind of “for personal use” ripping, but I think this is even more dangerous than implementing a “managed copy” system, because you’re effectively encouraging people to do something illegal (as stated in the copyright message that pops up before DVDs play, and also due to the US DMCA legislation) by not legally pursuing them (impossible, due to the number of people that are doing it) nor offering a legal alternative. The opportunity of having a fully digital movie library that can be created from your legally purchased discs is enormous, and it is technically much easier to achieve now thanks to development in hardware and storage technologies.

But I still think that we will have a system like this eventually. Which then makes the RealDVD decision even more ridiculous, and anti-competitive if the very people trying to kill RealDVD on copyright abuse grounds produces their own version of RealDVD in the future.

In more legal news, Viacom’s much publicized lawsuit against Google/YouTube reached a milestone this week, as both sides filed their summary judgement petitions. Viacom’s chances in the case is much diminished due to recent developments in recent cases, namely the Universal music versus Veoh case. And with Google now offering lots of opportunities for content owners like Viacom to make money off YouTube videos, even those uploaded without authorization, and the ability to remove videos, there’s not much logic in siding with Viacom on this one. And don’t forget about the free publicity that YouTube gives to new content, which is very much essential to companies like Viacom.

And in the most distasteful claim of the week section, we have the RIAA claiming that file sharers are undermining the Haiti relief effort. I don’t want to even want to go in to how the RIAA came up with this conclusion, but even if they’re right, it’s just really really really (really) bad taste, isn’t it? Using a disaster where so many died to promote their pro copyright agenda is just so wrong, but then again, it’s exactly the sort of thing you expect from the RIAA and MPAA. Techdirt’s analysis showed that hardly anyone was downloading the torrent of the Haiti relief album. And for those that downloaded, who knows if they donated to the Haiti relief effort or not. Maybe they donated a lot of money and then downloaded the album illegally, and maybe some of the people who paid for the album’s only contribution was the actual purchase of the album. And maybe the people who downloaded the album just didn’t have any money to donate, and who is to say that Haitian themselves aren’t downloading the album that’s been produced to help their flight (much of the Internet infrastructure survived the earthquake, for which the design of the Internet helped, as it was originally invented to tackle the problem of communication after nuclear war), and surely it doesn’t make sense to make them pay for it as well?

Onto Blu-ray and HD news. The Lord of the Rings is coming to Blu-ray in April, and it is one of the most eagerly awaited titles on the format. But I won’t be buying it and I know a lot of other Blu-ray collectors that won’t be either. And judging by ratings on Amazon.com, 2045 one star votes versus 149 five star ones, most people seems to be thinking of doing the same.

LOTR finally coming to Blu-ray, but it's not all good news

The reason is that the April version will be the theatrical version of the movies only, not the extended version. Instead of releasing one version that contained all the cuts (or at least release both cuts at the same time), there will instead be another Blu-ray release probably later in the year that houses the extended version along with more extra features. This “double dipping” is a well known way to get people to pay twice (or more) for the same movie, each time promising just a little more stuff that you must see and artificially putting breaks between the release dates of the various versions to get more sales. Well at least this time they didn’t release each movie individually, and then release a trilogy box set with more stuff a few month later. But with so many LOTR fans having both versions of the films on DVD, perhaps this is one time the studios will find it difficult to force a sale, as I’m perfectly happy to watch the theatrical version on upscaled DVD if I have to (and I’ve never watched it again ever since getting the extended cut, which I’ve watched about 4 times already, for each movie). Although with that said, I can see fans not wanting to wait and buying the April version anyway, which is exactly what the studio wants and they can make this happen by not releasing any details of the extended Blu-ray version until they’ve had enough sales from the theatrical version. Don’t fall for their tricks (say the guy that has 6 versions of Terminator 2 on DVD, HD DVD and Blu-ray)!

Netflix coming to the iPhone? If true, then expect the iPad to have it as well. Which means that by my calculation, 87.47% of all media devices sold today will be Netflix enabled, which is awesome news for Netflix and for digital video distribution, which was always thought to be entirely dependent on a large scale deployment of set top boxes.

And finally in gaming, there was the infamous PS3 leap year date bug earlier in the week that managed to cripple a huge percentage of PS3s. Apparently, a date logic error in most of the “fat” PS3 hardware meant that the consoles were wondering just what the hell had happened to February 29 2010, and then decided to fail to connect to the PlayStation Network.

This is fine, except many new games require a connection to the PSN even if you don’t play online, due to the need to sync trophy data, and so people were left with a PS3 that could only function as a media hub and a Blu-ray player. This was fine for me because I only use my PS3 as a media hub and Blu-ray player, and I had several good gaming sessions on my Xbox 360 while this whole thing was going down and it seemed like the official PS3 board was going to explode with all the complaining.

In the end, it was fixed relatively quickly. The date bug still exists on the PS3, but Sony somehow managed to fix the problem on their end.

All’s well that ends well? Not quite. And this again highlights a weakness of the increasingly net dependent nature of electronics, not just PS3s, and just how useful certain devices become when the Internet (or the connecting server) goes down. Full offline mode should be a prerequisite for any device I think, as well as lessons on just when leap years occur for their programmers.

And we come to the end of another WNR. Hope you’ve enjoyed this edition, and see you next week.

So instead of having a whinge, like most of my other posts on this blog, I though it would be nice to try and take a balanced approach to the problem and analyse the situation closely, playing the Devil’s advocate if I have to. Perhaps it will shed light on any compromises that may make DRM workable.

From a pragmatic point of view, DRM is not needed as it doesn't work, but game publishers feel better when games have it

Why do you need DRM?

Games get pirated. PC games especially. Game companies need to protect their products and make it as difficult as possible to pirate them. Games without DRM are an open invitation to online piracy, and also casual piracy where friends share a single purchase and install the game multiple times on multiple PCs. And without protecting their games, publisher fear that people will start to think that it is acceptable to pirate them.

But DRM has so far not stop games from being pirated. It may be effective against less popular titles that crackers ignore because it’s not worth it, but for the popular games, they are made online in a matter of days, if not sooner. Ubisoft may think their always connected approach will make the games harder to crack, but Silent Hunter 5, which uses the new DRM system, was cracked just a few hours ago, and less than 24 hours after the game was released.

It does make playing the games more inconvenient for people who have purchased the game, and it’s no secret that many resort to cracks to remove DRM from their games, or failing that, download the pirated version even after they’ve paid for the legal one.

Conclusion: Games get pirated regardless of DRM. At best, it slows the availability of the pirated version of make it more difficult to run, but determined users will find a way, and it might still be easier to deal with than DRM. All DRM does right now is to inconvenience legitimate customers.

DVD check systems like SecuROM are outdated in today's online world

DRM Type 1: DVD Checks

These are the easiest form of DRM to crack, and the oldest around. Sure, some things have changed like blacklisting and background services being installed to prevent the use of DVD emulators, but again it’s only a matter of time before it is cracked. This is also the form of DRM that buyers of the game frequently removes, as having to find and insert the DVD every time you want to play the game is a pain. Also, it means you must carry the DVD with you if you want to play the game while away from home. And only one person can play the game at the same time. Not only that, the SecuROM loader may also be hard to remove and it can interfere with your legitimate apps. The more advanced SecuROM also requires online activation, which basically bundles a DVD check with the type 2 DRM method listed below. And even if you jump through the hoops, the game still may not work due to compatibility and other issues, and the only alternative is to crack it if you want to play it.

Conclusion: This type of DRM is the easiest to crack and potentially very annoying to legitimate customers. It is also quite outdated as it doesn’t offer multiple install limitations by itself, and serial  and perhaps time will see it phased out in favour of online based authentication solutions, like the Steam or Ubisoft systems.

DRM Type 2: Once only online authentication

EA/Dice’s Battlefield 2: Bad Company uses this method, along with the “limited install” method. After you install the game, you only need to go online once to authenticate it, and it will never check again until some 27 years later. DVD checking is removed, so once you do the initial online authentication, you’ll never have to “proof” your innocence again. To prevent people authenticating and then giving the game away to do the same, the same serial can’t be used too many times (more on that later). As with any kind of DRM, it can be cracked (and it is probably quite easy to do so as well), but legitimate users may find that they don’t need to do it, and multiple install limit of 10 usually is generously enough to never having to worry about this aspect of the protection. Of course, this means that you must have an Internet connection if you want to play the game, but not many people have machines capable of playing new games and yet have no access to the Internet.

If the authentication server is down, then new users can’t start to play games until it does up again, but you only have to authenticate once anyway. If the authentication service is shutdown and no longer supports aging games, then purchased games can’t be played, although it stands to reason that the game won’t be sold at that time anymore, or will be sold in a variety that comes pre-authenticated.

Additional online features, such as trophies/achievements, can be optionally enjoyed, although this probably turns the game to a “type 3″ (see below) DRM, where logging into the optional online environment requires some sort of rudimentary authentication check (although probably less involved than a true “type 3″).

Conclusion: This is probably the most sensible type of DRM, although like all others, it fails to prevent piracy. It does prevent most legitimate users from having to resort to cracks to play the game conveniently, and this is also the least intrusive method, requiring no background apps that are hard to uninstall or constant Internet checks.

Steam's popularity shows that there are still some kinds of DRM people might accept

DRM Type 3: Once every startup online authentication

Steam uses this kind of method, although it does have an offline mode. Every time you start the game, it will check online to make sure you’re running a legitimate version. This again is easy to crack, and is slightly annoying to legitimate users as it locks them to a platform like Steam, and it means they need to ensure they have an Internet connection whenever they want to play the game. However, Steam does offer an offline mode that works like the “Type 2 DRM” above. Other platforms, do not. Platforms such as this also offers online features, such as chatting, trophies/achievements and other community features, that a totally offline game would not (or a game that loses its Internet connection during a session). If the authentication server is down, the you’re out of luck. If authentication support is removed due to old age, then you’re left relying on the platform operator to do the right thing and release offline patches, or otherwise, all your games will be unplayable. Judging from Steam’s success, people don’t seem to mind these restrictions too much and it’s unlikely to cease supporting games, although given a choice, most people would probably prefer not to have the Steam client on their system at all.

Conclusion: This kind of DRM is just about acceptable to the masses, although the option to go completely offline is required. The additional online features, which are optional, does add value to games. But you are reliant on others to ensure the authentication server is online.

Ubisoft uses the "constant authentication" method, much to the disgust of gamers

DRM Type 4: Constant connection online authentication

And we come to Ubisoft’s system. It doesn’t work because it’s already been cracked. And it inconveniences legitimate users because those without a steady, constant Internet connection won’t get to enjoy the game as it pops up an error message every time the connection dies. It also means it’s impossible to play the game with an Internet connection, so no offline mode. The same kind of additional online features can be offered as with the “type 2″ and “type 3″ DRMs.

Conclusion: This type of DRM seems to offer no advantages to the other kinds of online authentication, other than to show the game publisher’s total lack of trust in their customers. The pirates will play the cracked version with the authentication part removed, while legitimate users will play games hoping their Internet connection, or the authentication server, doesn’t die.

DRM Type 5: Multiple Install Limitations

Often used in combination to one of the above DRM types, multiple install limitations places a limit on how many copies of the game you can have installed on computers at any one time. The authenticate once DRM relies on this to ensure a single serial isn’t used hundreds of times over. This is different to how many concurrent gaming sessions you have on at any time, which may be just the single. You may need multiple installs for multiple PCs you have at home or work. Or if you’ve changed PCs, then you will need to have another install. The older type of system will keep track of how many installs you’ve made, and once that limit is reached, you won’t get to install the game anymore. In the bad old days, the limit wasn’t very generous, and people who upgrade their PCs a few time will then get locked out and have to contact tech support to unlock the game. The newer kind allows you to uninstall a copy to get back an “install credit”, which then allows you to install it on as many new computers as you wish, as long as you keep on uninstalling the copy on the old computer.

This type of limitation may be a bit redundant depending on which type of authentication the game also uses. With the type 4 constant connection DRM, this is redundant because the authentication server is able to track how many concurrent sessions there are and ban any serial that has too many. Even with the once at start up authentication method, this can be checked during authentication, and a pirated serial is likely to have many trying to authenticate at the same time from all over the world (this is the theory anyway, in practice, the pirated version doesn’t even need to contact the authentication server).

In real practice, there is really no need for this type of DRM unless it’s coupled with the once only type of authentication (type 2), and to be fair, this is usually the case. For example, Ubisoft’s new DRM places no install limits (it will only allow one session at any one time). Steam, likewise, has no install limits. But in some rare cases, like Bioshock 2, this limitation is placed (and it’s the bad old kind, the one that requires you to call tech support) along with a SecuROM DVD check and once per start up online authentication (Games for Windows).

Conclusion: This one is only need with the authenticate once method. Using it with any other method in place is overkill.

So what kind of DRM is acceptable and unacceptable to the general public?

So we get to the crux of this blog post. Just what kind of DRM are people willing to accept, and will still provide game publishers with that false sense of security that they crave. We’re of course talking about people who are willing to pay for games in the first place, as people who pirate will always do so either because they can’t afford to do anything else, or because they don’t want to. Based on the above analysis, here’s what’s acceptable and reasonable:

• Online authenticate, but please only do it once, even if it means install limits
• If you must authenticate for each gaming session, at least have a fallback offline mode for those with wobbly Internet connections and there should be no install limits
• Neither of these methods should use DVD checks

And of course, what isn’t reasonable:

• DVD checks because it really doesn’t protect the game publisher, as it is too easy to get rid of, and is redundant if used with online authentication
• Constant online authentication – it’s just a bad idea that offers no extra protection for the publisher, and offers plenty of reasons for gamers to abandon the system for a pirated version
• Combining two or more of the five listed types of DRM above (excluding the combination of type 2 and 5, since once only authentication can only work in conjunction with install limits)

Online services such as achievements can add to the gaming experience, while doubling as a DRM system

If DRM doesn’t prevent piracy, and if game companies must have them as a security blanket, what can game companies do to compensate paying customers for the inconvenience or encourage others to pay for the game?

The answer is already mentioned above: have lots of online based, but optional services that helps to provide extra value to the legal version. One thing the pirated version find it hard to do is to connect online to official servers, since any connection could invalidate the installed version or prevent usage. So having these online services like chatting, video/screenshot uploads, trophies/achievements, and perhaps even extra downloadable content (free or paid for), will all help convince people that the legal version is the best, most complete, version of the game.

And of course, price the game competitively, especially downloadable versions that offer savings to the publisher in terms of production, transportation and retail costs.

But whatever game companies do, they should respect paying customers and respect their legitimate concerns about annoying DRM system. Do the best to ease the  inconvenience and compensate customers for their troubles. Don’t force them to proof time and time again that they’re not breaking the law by adopting a guilty until proven innocent attitude.

And then, and only maybe then, they’ll win back some of the people they’ve lost to piracy.

The figures for US sales in January 2010 are below, ranked in order of number of sales (January 2009 figures also shown, including percentage change):

• Wii: 465,800 (Total: 27.6 million; January 2009: 679,200 – down 31%)
• DS: 422,200 (Total: 39.9 million; January 2009: 510,800 – down 17%)
• Xbox 360: 332,800 (Total: 19 million; January 2009: 309,000 – up 8%)
• PS3: 276,900 (Total: 11.4 million; January 2009: 203,000 – up 36%)
• PSP: 100,100 (Total: 17 million; January 2009: 172,300 – down 42%)
• PS2: 41,600 (Total: 45.3 million; January 2009: 101,200 – down 59%)

NPD January 2010 Game Console US Sales Figures

NPD Game Console Total US Sales Figures (as of January 2010)

My prediction from last month was:

January should see huge sales drop across the board, but that’s just a seasonal thing. And as such, it’s very hard to predict the order of things, although I believe the hardware sales ordering will remain the same. On the software front, January will be largely quiet, Mass Effect 2 on the Xbox 360 should do well, and the rest of the top 10 should have a familiar look to December’s. There are some big releases coming in February and March, so consumers can take a breather in January (and save up).

January’s figures are a mixed bag really. While the ordering was largely the same, the only difference being the Xbox 360 and the PS3 swapping places, there were larger than expected drops for all the consoles. On the software front, Mass Effect 2 on the Xbox 360 did indeed do well, being a console exclusive, and the top 10 had a familiar look, although still room to add in a few new entries.

Compared to January a year ago, only the Xbox 360 and the PS3 managed sales growth. This the second January in a row that the Xbox 360 managed growth, and that’s probably largely thanks to Mass Effects 2. Last January, the PS3 actually recorded a sales drop compared to January 2008, but this January, the PS3 showed the most positive growth. But this has to be taken into context, as the PS3 was doing extremely poorly back in January a year go – take this into account, the PS3 only grew by a paltry 3% between the two January’s of 2008 and 2010 (and for the same comparison, Xbox 360 sales grew by 45%). Sony has said that stock issues were partly responsible, or will be in February at least. Whether that’s true, or it just signals the Slim/price cut led surge in sales is dissipating, we’ll have to wait until March and April’s stats come out to confirm. The Xbox 360 showed growth largely thanks to Mass Effect 2 one would guess, and sales are being kept above the PS3 thanks to strong software sales (including Modern Warfare 2) in two of the last three months.

Looking at the negatives, and there were a lot of them, the Wii continues on with its 30+% month to month drop in sales after taking a break in December. The DS also saw a drop of 17% compared to January 2009. While the PS3 managed growth, the other PlayStation consoles saw massive drops, with the PS2 dropping below 100,000 units sold for the first time since I’ve started recording figures (since September 2007). The PSP was only 100 units away from having this unwanted distinction as well. Both of these platforms are dying a slow death, the PS2 understandably (although Sony would have wanted more PS2 owners to upgrade straight to the PS3 than what is evident), but it’s the PSP that must be worrying for Sony, especially compared to the DS. And as mentioned in the 2009 year in review, the revenue increase from the PS3 doesn’t come anywhere near the revenue drop from these two consoles.

Lets move onto software. As expected, Mass Effect 2 did well, but not enough to unseat New Super Mario Bros. for the Wii, which held on to the top spot. All the usual Wii titles are in there, with only Wii Play missing out on a top 10 spot. Modern Warfare 2 is still selling relatively strong, both console versions are represented in the top 10, with the lower placed one the only PS3 title in the top 10 once again. The Xbox 360 had two more titles, making it a total of four – Army of Two: The 40th Day and Darksiders made the list at 8th and 10th. There was also a non Nintendo Wii title in the top 10 as well, with Ubisoft’s Just Dance sneaking in at 9th. The Wii needs more titles like this to be hitting the top 10 to remain viable in the long term.

Here’s the complete list of the top 10 software sales:

1. New Super Mario Bros. Wii (Wii, Nintendo) – 656,700
2. Mass Effect 2 (Xbox 360, EA) – 572,100
3. Wii Fit Plus (Wii, Nintendo) – 555,700
4. Call of Duty: Modern Warfare 2 (Xbox 360, Activision) – 326,700
5. Mario Kart w/ Wheel (Wii, Nintendo) – 310,900
6. Wii Sports Resort (Wii, Nintendo) – 297,600
7. Call of Duty: Modern Warfare 2 (PS3, Activision) – 259,000
8. Army of Two: The 40th Day (Xbox 360, EA) – 246,500
9. Just Dance (Wii, Ubisoft) – 191,900
10. Darksiders (Xbox 360, THQ) – 171,200

Prediction time. There are some big titles being released in February, several that will help the PS3 more than the Xbox 360, including the platform exclusive Heavy Rain, and while it’s no longer exclusive, Final Fantasy XIII should have a bigger following on the PlayStation platform than on the 360. As a result, I expect the PS3 to outsell the Xbox 360 at the very least and maybe make a run on the Wii. BioShock 2 should do well on the Xbox 360, but the usual Nintendo Wii titles should also be in the top 10.

See you next month.

Let’s get things started with copyright news. We start with the, perhaps slightly optimistic, but potentially good news that the secret copyright treaty, the ACTA, might be in trouble.

Apparently, the various parties negotiating the treaty are failing to agree on various matters, and not all parties are keen on the secrecy part. The RIAA, MPAA and other trade organisations are no doubt busy trying to save the treaty, which could be the best thing since the DMCA in their eyes. They’ve tried to keep in a secret because the public backlash from controversial provisions (that could see people’s iPods being searched at airports for illegal downloads) would be too great. But it’s hard to keep a secret when the Internet exists. And countries typically don’t like a treaty that locks them into something too rigidly, and without rigid obedience to it, there’s really not much point in having this type of treaty.

Alice in Wonderland may not get shown across screens in the UK ...

Tim Burton’s new film Alice in Wonderland (HD trailer) may not be shown across the majority of cinemas in the UK due to a dispute with Disney. Disney’s plans to reduce the theatrical showing window, from 17 weeks to 12 weeks, have angered the cinema owners and they have threatened to boycott the film. Disney tried the same with animated hit Up, and cinema owners responded in the same way, but the studio backed down eventually. Studios like Disney are trying to bring films earlier to DVD and Blu-ray, as they have much more control over these formats in terms of revenue, and studios are also claiming it somehow prevents piracy as well. They do have a point in that most of the business at the cinema goes away after the first 8 weeks, so 12 weeks should be enough. But the problem is that if people know that they don’t have to wait long for the home video version, then they may skip the film at the cinema entirely. Of course, that’s only true of some people, as most feel that going to the cinema and watching the same movie at home are two completely different experiences, much like eating at home or at a restaurant – when money is not an issue, you can’t really substitute one for the other. But it just shows that for all the talk about protecting the industry, film studios only really care about protecting their own profits, and who cares if others in the business suffer as a result.

Staying in the UK, a couple of months ago, the BBC applied for DRM to be added to their high definition TV broadcasts. At that time, the British Office of Communication, Ofcom, denied the request, but it seems that persistence is paying off and the BBC might get its wish (or rather, the US TV networks and movie studios might see their pressuring of the BBC bear fruit). So why is DRM bad for HDTV? It’s bad because it can be used to prevent the recording or time shifting of TV programmes. It can also limit development of open source and free viewing software, since a licensing fee has to be paid to the DRM creators. And this fee also adds to the cost of otherwise free to air television. And it will still fail to prevent some clever person from recording the TV show and uploading it online. So why is the BBC so keen on DRM? Well, the pressure from the US might be intense and I’m sure threats of stopping the supply of programmes to the BBC and moving them onto other more secure broadcast systems such as subscription television will have the BBC, and Ofcom, worried as well.

BioShock 2 on the PC: DRM Galore

Also in the “we love DRM camp” is the publishers of the game Bioshock  2, 2K Games. So much so, they’ve added 3 different layers of DRM to the game to provide redundant copy protection that still failed to protect the game from being copied. Microsoft’s “Games For Windows” system is used for the disc version, and it already provides a few layers of DRM, and that would be more than enough for most publishers as it features online authentication. But add in limited installs, and then Sony’s SecuROM (the system that’s so hard to remove, that it’s starting to look like malware), and you just have to shake your head at how paranoid game publishers have become. A word of advice: stop losing sleep about the “lost” income from piracy, income that you probably wouldn’t have earned anyway had the pirated version not been made available, as there’s a finite amount of money people can spend on games. Instead, worry about losing your customers to piracy due to idiotic DRM schemes, because that’s a real threat. This is all part of the theory that game publishers’ actions may actually be contributing to piracy. I’m not sure about that, but they certainly have failed to prevent it.

One theory is that lower prices do help to combat piracy, not only for games but for movies and music as well. Apple is keen to test out this theory, and they want TV networks to agree to lowering prices of TV shows on iTunes to under $1, which will no doubt also help the iPad at launch. As expected, they are running into resistance from the TV networks, who sees any price cut as an invitation for more in the future. While it may be simplistic to say that something is only worth as much as people are willing to pay for it, but this is truer for digital content then physical goods, which have physical costs attached to producing each individual item. For me, it’s all about finding the right price, that will discourage people to get the content from illegal sources, and at the same time also provide a healthy profit for content owners.

And bad news for video sharing website Veoh. After winning a legal battle against Universal Music, they may be going out of business anyway. The legal battle prevented the sale of the website, and when it was over, it was too late to obtain further funding. Whether this is more due to the increasing competition in the sector, or whether the legal battle too more of a toll than it appears, it’s hard to say.

Let move on 3D/HD news. I’ve mentioned Toshiba’s impressive Cell TV before, the one that uses the same processor as the PS3 to enable 8 HDTV channels to be simultaneously displayed on the TV, in Back to the Future II style.

Toshiba's Cell TV can convert 2D into 3D

But with every other manufacturing trumpeting their 3D lineups, Toshiba was oddly quiet, and refused to even provide information as to which 3D format they will be going with. Perhaps they don’t want to get burned again with another format war by choosing a side right now. Or perhaps there’s really no format to go with even if they wanted to. The Blu-ray 3D specs are a start though. In any case, the Toshiba Cell TV has enough power to convert 2D broadcasts into 3D (well, pseudo 3D, anyway), so whichever format Toshiba decides to go with, it should be quite brilliant.

Speaking of format wars, the HTML5 format war is brewing nicely, with the latest version of Opera supporting HTML5, but only the Ogg Theora codec. So on top of the Flash vs HTML5 video delivery war, we also have the Ogg Theora vs H.264 war. Makers of free browsers like Ogg Theora because it’s free, whereas H.264 has licensing costs that have to be paid by somebody. But the industry prefers H.264, since hardware acceleration support is widely available, and it produces better quality streams than Theora at the moment. The likes of Apple and Google can of course absorb the costs, but it’s probably too much for the likes of Mozilla or Opera to do the same. The H.264 licensing people, the MPEG-LA, really needs to do something about this, perhaps eliminate royalty payments for certain browser manufacturers or something.

And on a related note, Hulu is gearing up for HTML5 compatibility (it uses H.264, just like YouTube and Vimeo’s HTML5 efforts), and so this could mean Hulu for the iPad, which would be a big selling point for Apple.

And finally in gaming, the January NPD US video game sales figures are out, and I will have the write up of it nearly next week. A sneak preview: The Wii won, the Xbox 360 beat the PS3 thanks to Mass Effect 2. Only the PS3 showed significant growth year on year, but that’s only because it wasn’t exactly selling like the proverbial hotcakes this time last year.

And the 2009 Game of the Year poll has been closed, or rather, moved off the front pages. CoD: Modern Warfare 2 won, beating second place Assassin’s Creed 2, with Uncharted 2 being the best of the platform exclusive titles.

And so that’s another week. It’s now the year of the Tiger, so 恭喜发财, 万事如意 (which roughly translates to “may you get rich, may your wishes come true and death to DRM”).

Let’s start with the copyright news. The hypocritical French government is at it again, this time committing yet another act of copyright abuse. This time, it was the anti-piracy agency HADOPI, which is tasked with overseeing the three-strikes system. By using unauthorised fonts in their logo, they are now threatened with a lawsuit from the owner of the copyright holder. By my count, that’s a lot more than 3 strikes for the French government and their anti-piracy brigade – time to ban them from the Internet I suppose, or better, ban them from messing up the Internet.

When they’re not busy suing single mothers and students (more on that later), the RIAA, MPAA and their lackeys are looking for other targets to attack. And this time, it’s the military. Personnel serving overseas will try to stay in touch with what’s going on back at home in any way they can, and this includes trying to get access to the latest entertainment, including the latest music releases and movies. Unfortunately, it’s not always easy to find legal sources for these content, with many online stores refusing to ship items to certain overseas locations (and not to mention the cost). And this is why many resort to illegal downloads, which provides a source of entertainment when legal ones do not exist. The RIAA and MPAA often use patriotism in their arguments, about protecting American jobs and such, so surely it would be another act of patriotism to provide cheap or free content for overseas military personnel. But instead, the RIAA and the MPAA with support from the US Department of Defence is launching a crackdown on illegal downloads. I do wonder just how much money the RIAA and the MPAA has lost to illegal downloads attributed to the military, and is it really that huge of a problem to get the DoD involved, during wartime no less. It’s more to do with the principle of the thing, I mean how bad would it look for the RIAA/MPAA  if the very people risking live and limb everyday to defend their freedoms didn’t even pay for the latest Lady Gaga single, even though they don’t actually have the choice to pay for it due to lack of a legal source. I mean, how dare they!

The RIAA has yet to resond to the $1.92m verdict being reduced to $54,000

And I guess if they can squeeze $1.92 million from single mothers, the RIAA probably thinks it can squeeze a couple of million more from the military. They may have to think again if that’s their strategy, because a judge has finally put an end to incredible damages and reduced it by $1,866,000. Jammie Thomas-Rasset will now only have to pay $54,000 in damages, or $2,250 per song (that’s worth about $0.80 today). It’s still a lot, but it will give hope to that other RIAA victim, Joel Tenenbaum, who is seeking to appeal his own verdict and to ask the $675,000 damages to be reduced as well. The judge couldn’t justify a near two million dollar judgement for the simple act of trying to secure some free music, which made it necessary to also share these music files with others. Finally, a judge that seems to understand that the intention of Rasset and Tenenbaum was never to illegal distribute songs, but rather, to get free music. Any file sharing was just a side effect of the process. The difference between this and someone who actually intentionally leaks copyright materials online, or who seeks profit from sharing music, needs to be distinguished when it comes to handing out damages. The RIAA has yet to respond to this “setback”, and they could even seek a new trial, as their attempt to make an example of Jammie Thomas-Rasset by seeking huge damages would be in vain.

The BPI, the UK version of the RIAA, has attacked ISP estimates on the cost of implementing a three-strikes type system for the UK. Even their estimates put the costs at tens of millions of pounds every year, and not a single cent will be contributed by the BPI, whose members have just had a record year in terms of profits. If groups like the BPI believes that a three-strikes system will work to stop piracy and improve their revenue, then you had to wonder why they are not willing to put their money where their mouth is. They will argue that they’re not responsible for online piracy, but are ISPs? And when ISPs pass on the cost to the consumers, most of whom will not be pirates either, and yet they have to pay. Then there’s the cost to the judicial system, which the government has to pay (which might still get passed to your average non pirating citizen via taxes). If the system works, then the music industry will benefit, so why would it be unfair to ask them to contribute to the cost of such a system, which according to their own estimates, will probably be less than their monthly lobbying spending. Of course, one reason why one might not want to put money towards something like this is that if you knew deep down that it simply won’t work. It might scare a few more people into not pirating, and it forces the government to accept online piracy as their responsibility (since they’re the ones now administering the three-strikes system), but through VPNs and encryption, any monitoring efforts by ISPs can be bypassed, and piracy will still go on. But I think the copyright holders know this, but getting the government to accept responsibility for piracy is probably all they need from this, after which it will make it much easier to ask for things like a piracy tax, basically a government guaranteed income. It’s certainly easier than evolving your business model or anything.

The Oppo BDP-80 costs $200 less then the highly rated BDP-83, with some removed features

But changing the business model may be the only way to truly halt piracy, since technical solutions will always have technical workarounds. Radiohead’s guitarist, Ed O’Brien, believes this to be the case, that the music industry needs to stop running “an analogue business model in a digital era”. The digital revolution has been bad for many traditional industries, like the newspaper industry, but I for one thinks that it actually brings more benefit to the music and movie industries. Certainly, DVDs (and now Blu-ray) has been pretty good for the movie industry. But the next step needs to be taken, where VHS to DVD still relies on physical media, the next step would be to move to an entirely digital platform. Physical media means production, transportation and display space and warehousing requirements for retailers. Digital media does not carry any of these overheads. So instead of stocking the top 100 CDs, retailers could easily stock a collection consisting of hundreds of thousands of songs through kiosks. And it’s even easier to do this online, by putting every single song, movie, expired TV show, lost episodes – everything – online and for sale. The obscure then becomes accessible, and anyone wanting to watch an episode of a long cancelled TV show, or a single from a virtually unknown artist from 1965, can do so and copyright holders can benefit, as long as the price it competitively. Instead of trying to sell millions of copies of the same thing to consumers, they can sell millions of different things. That’s the power of digital and the Internet.

Let’s move onto HD. Oppo has released details of their sub $300 Blu-ray player, the BDP-80. The cost cutting has been made by removing a video processor, cutting back on analogue outputs and SACD analog output, as well as removing some of the remote control functions like IR In/Out ports and a back-lit remote. Oppo recommends the new player for most people, other than those with the largest screens and want the best possible picture quality courtesy of the on-board ABT2010 video processing chip found on the $500 BDP-83.

Once the player gets released, I’m sure there will be more extensive reviews and video testing to see if the BDP-83 is still work spending extra for.

And finally in gaming, the PS3 motion controller has been delayed until just before the Xbox 360’s Project Natal is set to be released. I think Microsoft will be thrilled with the news, since the PS3 motion controller was supposed to have been released in the next few month.

Instead, the controller add-on will be available in Autumn/Fall of 2010, possibly just before the November release date of Project Natal. The Wii-like PS3 motion controller will give a much more accurate than the Wii controller, and coupled with the PS3’s EyeToy, it can give the Wii some competition when it comes to casual games, and the Natal as well in terms of motion controls mixed together with augmented reality.

Despite the recent PS3 successes, Sony is actually suffering quite a bit as price cuts, dropping PS2 sales, and more worryingly, dropping PSP sales have caused a huge $1.3 billion revenue loss from 2008 to 2009. Both Nintendo and Microsoft only experienced negligible losses compared to 2008 ($200 million for both). Most of Sony’s losses stemmed from a $700 million drop in PS2 revenue, which was always going to happen at some point. What Sony had hoped is that PS2 gamers would have moved straight to the PS3, but that apparently hasn’t materialized (not yet, anyway). Brand loyalty apart, there are more options for PS2 gamers to upgrade to compared to PS1 games when they moved en mass to the PS2. The Xbox 360 offers cheaper gaming, while the Wii offers casual gaming that was once served by selected PS2 titles. And in terms of PS2 platform exclusives, many of them are no longer exclusive, and the must have PS3 exclusives are mostly new to the platform (Uncharted, for example). With that said, the new Final Fantasy game is coming soon that may be enough to convince many PS2 owners to upgrade, but once again, it’s no longer a platform exclusive either.

Anyhoo, that’s all I wanted to write this week. Have a nice one.

The total hardware sales figures for 2009 are as follows:

• DS: 11,185,400 – up 12.4% (from 2008)
• Wii: 9,594,000 – down 5.7%
• Xbox 360: 4,770,700 – up 0.8%
• PS3: 4,334,500 – up 22.3%
• PSP: 2,495,900 – down 34.8%
• PS2: 1,799,900 – down 28.1%

This is a breakdown of these numbers, for the Xbox 360, PS3 and Wii:

NPD 2009: Console hardware sales breakdown

If you compare the above graph with the equivalent one for 2008, you can see that overall, the situation is still fairly similar. The Wii domination is still present, although it has lost a small chunk of that pie to the PS3 mostly (the Wii had 55% of the three way pie in 2008, compared to 51% in 2009). The Xbox 360’s market share remains quite similar, with the green piece of pie above representing around 25.5% of the market (in 2008, it was 25.6%). So the quick conclusion is that the PS3 is the winner in terms of growth in 2009, with the Xbox 360 just about pulling even, and the Wii losing out. Looking at the total hardware sales numbers above the graph, this is pretty evident, with Wii sales down nearly 6% for the year. Wii sales has been disappointing for much of 2009, even when PS3 sales were also disappointing at the beginning of the year. It was during this time that Xbox 360 sales were strong, but there was a weak period in the middle for the Microsoft console. The PS3 finished the year strongly, and the Wii even stronger. So while the graph seems to show the PS3 taking away sales from the, the actual series of events was more complicated.

Of course, if there is one event which really defined the year for the PS3 then it came in September when the PS3 Slim was released. More importantly, it was also this time that Sony decided to cut prices for the PS3, to bring it more in line with that of the other two home based consoles. To demonstrate this turning point graphically, it is best to compare sales of the PS3 to the Xbox 360 both before and after the official introduction of the Slim:

NPD 2009: Hardware Sales, Before PS3 Slim/Price Cut

NPD 2009: Hardware Sales, After PS3 Slim/Price Cut

I think the graphs speak for themselves. Note that it again would inaccurate to say that PS3 took sales away from the Xbox 360, and although there is some truth in that, it isn’t the whole picture. The above graphs are almost exactly the opposite of what happened in 2008, when the PS3 had a good lead over the Xbox 360, but the subsequent price cuts helped the Microsoft console fight back in style. The PS3 “fightback” was less stylish than what happened last year, but the price cut was also more moderate, and the Xbox 360 had Modern Warfare 2 to help with sales.

Now let’s look at game sales. Looking only at the monthly number one titles, here they are:

NPD 2009: Monthly Number One's

NPD 2009: Monthly Number One's

Microsoft’s dominance continues on from last year (60.96% back then versus 60.14% in 2009), but the Wii has managed to grab a few more spots, with the a single title that won best selling game of the month for the PS3. Only looking at the monthly number one’s is always a bit misleading, because monthly winners do not always equal yearly winners, and several of the listed titles are not in the yearly top 10. But monthly number ones are important, in that it provides hype and recognition for the console and games that win it. Developers will develop for the console that can allow them to top the monthly and yearly charts. But this is also where we see the big problem with the Wii, that despite having many monthly number one’s, all of them are first party Nintendo developed games. Third party games on the Wii are doing quite poorly and many developers have already signaled their intention to reduce resources towards Wii game productions, which is not good news in the long term for Nintendo. So while Nintendo is making the big bucks, they need to share or end up with a console with a very limited range of in house produced games.

Taking the above approach and extending it to the top 10 games every month, we have the following breakdown in terms of game units sold:

• Wii: 22,600,500 (43.65%, up 523,400 from 2008)
• Xbox 360: 20,425,300 (39.44%, up 1,500,700)
• PS3: 8,756,100 (16.91%, up 2,388,900)

NPD 2009: Monthly Top 10

On the surface, this seems to indicate tremendous growth for software sales in 2009, but software revenue is down nearly 10% compared to the year before. The biggest games of 2009 were bigger than the biggest games of 2008, but everything else was down. But you will also see the Wii domination here, and the software growth for the PS3 as more and more consoles get into people’s homes.

The yearly top 10 will give us an even better picture of where things are, although at the current time of writing, I do not have actual figures for sales, just the ranking, which you can see in the table below:

NPD 2009: Yearly Top 10

If and when I get concrete stats, I will update this article with them and the related graphs, but even without them you can see the clear Nintendo domination in games. While the Xbox 360 had the top title in Modern Warfare 2 (whereas last year’s top 4 were all Wii titles), it appears that the Wii domination has been extended. The PS3 still has the solitary single game in the top 10. But again, the problem of poor third party games on the Wii is clearly evident, 6 Wii titles and 1 DS title in the top 10 and not a single third party game. Meanwhile, the top Xbox 360 game and the only PS3 game were all third party titles. It’s clear why third party publishers like Activision or EA likes the PS3 and Xbox 360, and not so much the Wii when it comes to counting profits. It is an area that Nintendo needs to work on, perhaps helping third party developers to get more out of the Wii and throw in some more promotion and product bundling.

What the stats that I posted monthly, and what is shown above doesn’t tell you is overall revenue. Gamasutra has these stats here and despite the PS3, Sony is actually the biggest loser of 2009, in terms of revenue. This is because despite positive PS3 growth, PS2 and PSP sales are down 28 and 34% in number of units sold and probably greater in terms of revenue due to price cuts. Sony lost more than a billion dollars worth of revenue between 2008 and 2009, and the market share of the PlayStation brand shrank from 34% in 2007 to 26% in 2009. Nintendo is the big winner, and now controls 50% of the market in terms of revenue, with the Xbox 360 being a small winner compared to 2008, but still losing market share compared to 2007. While Sony may be confident that PS3 growth will eventually replace lost PS2 sales, the PSP is less positive and has not been able to compete with the DS and DSi for sometime now, with the DS/DSi recording the second best set of growth numbers in 2009 . For Microsoft, having only a single home based console, there’s less room to maneuverer and they will hope that Project Natal will be able to grab back some of the market share from the Wii’s casual gaming audience.

So that was the year that was. The economy, PS3 price cuts, and a few selected high profile games (Modern Warfare 2 comes to mind) were the major factors influencing the year. While sales are down compared to 2008, which was a record year like never before, the industry can still be relatively positive and 2009 still represents the best year apart from 2008.

In any case, all of this is pretty trivial compared to what’s happened in Haiti during the last week. This is a good page set up by Google that gathers all the information you will need, whether it’s to read more about the crisis, to donate or try to communicate with people you know in Haiti.

Starting with the copyright news, Real Networks has lost an anti-trust counter-suit against the MPAA. As you may know, the MPAA sued Real Networks’ RealDVD product, a software that creates a heavily copy protected copy of a DVD that can be played without the original disc. The MPAA won a successful injunction against the sale of Real DVD, but Real Networks hit back with an anti-trust lawsuit claiming the MPAA studios, through DVD copy protection licensing, is operating a cartel and prevents products like RealDVD from existing legally.

RealDVD is another step closer to permanent death, if it hasn't gotten there already

It was always a shot in the dark, so it was no surprise that it missed the mark. The judge explained that no damages could be found from the MPAA’s actions, and that the only damage was being done by RealDVD. Not what Real Networks wanted, and their CEO stepped down, probably not as a result of the court’s decision, but perhaps also not entirely unrelated. So was the judge right in dismissing the case? First of all, a cartel is defined as “a combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members”. We know that DVD copy protection is so ineffective, that a junior computer science student probably has the ability to break the code in less time than it takes to make a sandwich. And so from a technical point of view, DVD copy protection is useless. But the studios still persist with it, and charges licensing fees all over the place. For something that they know doesn’t work. So instead of acting as a copying deterrent, it’s basically there only for licensing, and through licensing agreements, to prevent people and companies from doing things to the DVD that the studios don’t agree with. And it was with the licensing agreements that they attempt to kill innovative products like RealDVD and Kaleidescape, products that may affect the production, pricing, and marketing of DVDs, and also the studios’ own products like Digital Copy and Managed Copy. And it wouldn’t be like the first time that DRM is used in an anti-competitive way, and even Apple has gotten into trouble in Europe over this very issue. You get the feeling that governments and courts really do not yet understand the full implications of DRM, and its anti-competitive nature when coupled with something like the DMCA, as otherwise the DMCA would never have been passed or there would be provisions in there to force interoperability and to prevent anti-competitive behaviour.

OiNK's founder is found not guilty. Nobody saw that coming, honestly.

But it seems not all courts, and juries, can be intimidated by the copyright holders’ usually well (and expensively) prepared cases. Alan Ellis, the founder of the music sharing service OiNK, has been found not guilty by a UK court, despite the website being shut down in 2007. The “Google” defence was used, in which Ellis’s defence claimed that OiNK operated in the same way as Google, by not actually hosting infringing content, but by simply organising the available information. Of course, this is true of all BitTorrent download websites as well, and the same defence did not work for The Pirate Bay. But for Alan Ellis, this is a major victory, and a permanent one, since there’s apparently no more avenue of appeal for the copyright holders, and so the decision will be final. Whether this sets a precedent that will be referred to in future cases, particularly ones in the UK, only time will tell.

With courts being sometimes unreliable, the RIAA wants the FCC to act and make ISPs copyright cops in the US. ISPs disagree, as do digital rights groups, consumer groups, and some business groups. While these groups have been making the right arguments, I’m still somewhat surprised that more has not been made of the implications of allowing private companies such as ISPs to spy on user’s activities and pass on user information onto other private companies for financial benefit. And even if you take away the privacy arguments, there’s still the issue of whether ISPs have the power or the legal knowledge to determine just exactly what is infringement. I know it is common sense in most cases, but we do have police and courts for reason, and that is to prevent private justice being dished out without regulation to guide the rulings and prevent abuse. If the RIAA is given the power to order ISPs to become copyright cops, do you trust them (or the ISPs, who will be fearing lawsuits from the RIAA if they do not comply) to not abuse this power, which effectively can cut off their most important form of communication, which can lead to serious consequences such as the loss of a job or a business.

In HD news, more information is slowly trickling out in regards to 3D TV and Blu-ray. To summarise the whole situation, I would say that an active shutter LCD glasses will be used, which will require a display with 120Hz refresh. Now, most TVs have that but what they don’t have, at the very least, is the ability to actually accept a 120Hz signal (most accepts the 60Hz as outputted by Blu-ray players, and then duplicate frames to get to display it as 120Hz). This, plus signal processing requirements and certain display issues, will mean that you will definitely need a new TV, unless it is one of the very few that is stated to be 3D ready. For similar reasons, you will also need 3D ready Blu-ray players, although as mentioned here before, the PS3 should be fine with a firmware update (and this may be true of a few other players as well).

A mock up of what the "3D Ready" logo may look like

I suspect as we get closer to the 3D rollout, terms like “3D Ready” will have more meaning, and perhaps some kind of certification and labeling program will be introduced to avoid consumer confusion. So the question many of you may have, and it’s one that I’ve been asking myself as well, is that should you buy a TV now or wait until the 3D ready sets are out. For those in the US, you won’t have to wait long, and if you like plasma TVs, then the new Panasonic 3D line up will be the one you need. The cost of adding 3D compliance to TV sets is probably not all that high, and so I would expect most new models to be 3D ready by the end of the year or sooner. But the real question is do you want or need 3D? That’s a question only you can answer, but my feeling at the moment is that 3D is a gimmick, but one that I would definitely want to experiment with.  So need? No. Want? Maybe. So with that said, if I find a new TV (and I need one) for a good price and I’m in a hurry to buy, then I’ll probably buy it even if it doesn’t have 3D. But I will at least wait until several 3D models are available and then see what the price situation is like, and if there’s no premium on the 3D models (and I don’t expect there to be), then I’ll get one (and then probably spend less than 1% of the time using the TV in 3D mode). If the TV manufacturers do charge a large premium on the 3D models, then I’ll consider that a rip off and buy one of the outdated 2D models on the  cheap.

Speaking of rip offs, how would you like paying $3,500 for a Blu-ray player that only costs $500 (or less). The $3,500 Lexicon BD-30, marketed as a THX certified Blu-ray player, is apparently nothing more than an $500 Oppo BDP-83 with a new outer shell and minor modifications (like a new splash screen when the player loads). The Oppo is not THX certified, but somehow the Lexicon, with practically identical hardware, gets it, which suggest THX certification is little more than handing over some cash to THX, at least in this case. So if you want a THX certified Blu-ray player, without the actual THX logo on the player itself, then I have to throw yet another recommendation towards the Oppo BDP-83.

If standalones are not your cup of tea, and HTPCs with Blu-ray playback are too bulky and noisy for your needs, then Asus may have just want you need. It was only a matter of time before Nvidia Ion enabled Nettops come bundled with a Blu-ray drive and allow you to play Blu-ray movies in these small, quiet systems, and the Asus Eee Box may be the first of many that can do this. They would make ideal home theater PCs, due to the small space, low heat and noise and the usually stylish design of the systems.

And finally in gaming, the NPD analysis sort of covers this week’s news items. The reactions from the companies involved are, as always, positive. Nintendo will be happy no doubt having dominated everything in December, having lost a lot during the rest of 2009. Sony is happy because the PS3 is finally selling in numbers that the successor of the PS2 should be selling at. And Microsoft is happy because they managed to get themselves a good lead over the PS3, and will look forward to holding on before Project Natal arrives, and with all the hype the add-on is getting, there’s a good chance that Microsoft will get a bit of the “Wii-effect” when it comes to selling Natal to non traditional gamers.

The other piece of news is that the PS3 3.15 firmware is now a mandatory install, unlike previous firmware updates that have always been optional. This is bad news for those that have been skipping firmware updates fearing that each update increases the risk of their console suffering the dreaded “no disc reading” problem, or the infamous Yellow Light of Death. While I was a victim of a the “no disc reading” problem after a firmware update, I was recently forced to install 3.15 as well, not because it was mandatory, but because I had to if I wanted to play new Blu-ray movies that required a AACS key update. So far, the PS3 is acting normally, and I had a good chance of that happening since the firmware troubles I suspect affects much less than 5% of all PS3s. Nobody knows just how many PS3s are affected of course, and Sony refuses to even acknowledge there is a problem even after being sued over it, and with most PS3s unaffected, fanboys can easily claim everyone who says their PS3 bricked after a firmware update is a liar or just someone who doesn’t know how to use sofisticated [sic] equipment (until it happens to them, of course). What I really should do now is sell my old PS3 and get a new one, which will be easier to sell now that I’ve managed to get the latest firmware loaded on it. You really do have to admire Microsoft’s eventual response to the RRoD problem, even if you can’t exactly admire the design and engineering of the actual console.

Okay, that’s all I have this week. I will be writing a 2009 year in review type of piece for the NPD video game stats, which should be online this week or the next at the latest.

The figures for US sales in December 2009 are below, ranked in order of number of sales (December 2008 figures also shown, including percentage change):

• Wii: 3,810,000 (Total: 27.1 million; December 2008: 2,150,000 – up 77%)
• DS: 3,310,000 (Total: 39.4 million; December 2008: 3,040,000 – up 9%)
• PS3: 1,360,000 (Total: 11.1 million; December 2008: 726,000 – up 87%)
• Xbox 360: 1,310,000 (Total: 18.6 million; December 2008: 1,440,000 – down 9%)
• PSP: 654,700 (Total: 16.9 million; December 2008: 1,020,000 – down 36%)
• PS2: 333,200 (Total: 45.3 million; December 2008: 410,000 – down 19%)

NPD December 2009 Game Console US Sales Figures

NPD Game Console Total US Sales Figures (as of December 2009)

My prediction from last month was:

December hardware sales should be even higher than November’s based on past trend, but with MW 2 still selling in good numbers, it should help the Xbox 360. But I suspect it will be a closely fought race between the Xbox 360 and PS3 for the third place finish, behind the DS and Wii at first and second. Software wise, MW 2 should still be selling well, and should hold top spot, although Wii Fit Plus may make a surprise surge. But in all likelihood, both versions of MW 2 will probably beat New Super Mario Bros. Wii to furnish the top 3 spots. Overall software sales will be down, because it will be hard to beat this month’s figures.

The race between the PS3 and the Xbox 360 was indeed a close one, but one that the PS3 ultimately won, albeit by only a couple of percentage points (the PS3 had 12.62% of the console market, the Xbox 360 had 12.15%). The demand for Blu-ray was obviously higher than the demand for Modern Warfare 2, which did not do as well as I expected, or more precisely, other titles managed to break even more records. And by other titles I mean Wii titles. The Wii is the success story for December 2009, and reversed the trend for the entire 2009 in a single month. It was this hardware led surge by the Wii that helped several Wii titles, the ones that every Wii owner seems to have (and the ones that new owners must buy), that also helped Wii software to surge, taking the top 3 spots comfortably. This is why the second part of my predictions, the software based ones, proved largely to be incorrect, and I, and many others, underestimate the demand for the Wii (yet again, it seems, for another holiday season).

To highlight just how amazing and how against the trend the December Wii numbers are, here are some stats:

• December 2009 sales of the Wii are 77% higher than that of the same period in 2008, which back then was a record in itself
• From March 2009 to November 2009, the average growth rate for the Wii was negative 41.2% (in other words, for these nine months, Wii sales were down an average of 41% compared to the same months in 2008)
• Wii sales for December 2009 was higher than April, May, June, July, August, September, October and November of 2009 combined!

And when you add in the amazing DS numbers, which also recorded year on (record) year growth, it seems Santa managed to bring a big gift for Nintendo, and exactly when they needed it as well.

Of course, the other success story for the second half of 2009 has been the PS3. The price cut and the PS3 slim has revitalized the console when it looked like coming a distant third in the home console wars for this generation. While there’s nothing to suggest the PS3 will dominate like the PS2 of the previous generation, not if Nintendo can do anything about it, but there are signs that it might yet beat the Xbox 360 given enough time. The increasing popularity of Blu-ray, and more importantly, the lower price of the PS3 (which makes it once again able to compete with standalone players, something that it couldn’t do in the first half of 2009), has helped it overcome the Xbox 360’s Modern Warfare 2 led hardware surge. The year on year growth figure of 87% is amazing, but probably more amazing than it actually is, considering how badly the PS3 was selling this time last year (behind the PSP, and half of the Xbox 360). If anything, the PS3 is only starting to sell at the levels that many had expected at this stage of its lifespan, and it had been seriously under performing before the recent changes.

With Nintendo sitting happy at the top, and the PS3 jumping over the Xbox 360, Microsoft might be worried, and they probably are. But that’s only because of the previous successes of the console, making the current numbers, which Microsoft would only have dreamed of at the launch of the console, seem so disappointing. Nobody expected the Xbox 360 to stay ahead of the PS3 for very long after the PS3 launches, not even Microsoft and not after all the RRoD problems. But while monthly sales have only started to lag behind the PS3, it still holds more than a 7 million lead over the PS3 on the console front, and that lead should last for a while yet at the PS3’s current growth rate. And, Microsoft will hope, that when Natal is out at the end of the year, it will give the console enough momentum to see out the rest of this generation, although it will have to ride out 2010 and hope that Sony doesn’t catch up too quickly.

In any case, December 2009 was an excellent month for gaming, the best ever in fact, and managed to easily beat the record breaking December 2008 largely thanks to Nintendo (and with Sony finally doing as well as it’s supposed to). The top 10 game sales also managed to beat the top 10 of December 2008, but 2009 still marks a largely down year compared to 2008. As mentioned previously, the Nintendo Wii surge helped Wii games to dominate the top 10 charts as well. The average new Wii buyer will almost always buy one or all of the following “must-have” titles: Wii Play, Wii Fit (Plus), Mario Kart and the new Wii Sports Resort – and all of these managed to get into the top 10, even if some have been missing from the list for most of 2009 due to lackluster hardware sales. The other consoles don’t really have these kind of must-have games, mainly because that Wii games age much better than their PS3 or Xbox 360 counterparts. Many still say the best title on the Wii is still the bundled Wii Sports, and it’s hard to imagine a game of this age on the Xbox 360 or PS3 that is still played as often. The Xbox 360 version of Modern Warfare 2 fell from the previous month’s record high to something that’s still quite respectable for a month old game, still selling above the PS3 version but by not as much since the PS3 version’s fall was less dramatic. This now means that almost one in three Xbox 360 owners now have a copy of Modern Warfare 2, which is simply amazing (it’s just over 1 in 4 for the PS3, which is still amazing, especially considering that not everybody likes shooters). MW2 was the only PS3 game in the top 10 though, but the Xbox 360 had two more. Assassin’s Creed II sales on the Xbox 360 nearly didn’t drop at all coming into the second month of release, and the semi platform exclusive Left 4 Dead 2 also recorded similar sales figures as last month. Overall, Wii games dominated with 64.6% of the top 10, with the Xbox 360 getting 22.6%, and the PS3 with 8.1%.

Here’s the complete list of the top 10 software sales:

1. New Super Mario Bros. Wii (Wii, Nintendo) – 2,820,000
2. Wii Fit Plus (Wii, Nintendo) – 2,410,000
3. Wii Sports Resort (Wii, Nintendo) – 1,790,000
4. Call of Duty: Modern Warfare 2 (Xbox 360, Activision) – 1,630,000
5. Call of Duty: Modern Warfare 2 (PS3, Activision) – 1,120,000
6. Wii Play w/ Remote (Wii, Nintendo) – 1,010,000
7. Mario Kart w/ Wheel (Wii, Nintendo) – 936,000
8. Assassin’s Creed II (Xbox 360, Ubisoft) – 783,100
9. Left 4 Dead 2 (Xbox 360, EA) – 728,500
10. Mario & Luigi: Bowser’s Inside Story (DS, Nintendo) – 656,700

January should see huge sales drop across the board, but that’s just a seasonal thing. And as such, it’s very hard to predict the order of things, although I believe the hardware sales ordering will remain the same. On the software front, January will be largely quiet, Mass Effect 2 on the Xbox 360 should do well, and the rest of the top 10 should have a familiar look to December’s. There are some big releases coming in February and March, so consumers can take a breather in January (and save up).

I should say “see you next month” as I usually do, but I will also have a 2009 year in review up in the next week or two, which will go through and summarize the stats for 2009, similar to what I did for 2008 around this time last year. So see you until then.

Update: As promised, the 2009 year in review is now up.