Company upped year's sales target to 5 mil units

It’s been a mostly depressing year for the videogames biz, with sales down across the board. But Microsoft is one of the few upbeat players, with “Halo: Reach” as the year’s top title so far, its redesigned and cheaper Xbox 360 console selling briskly and now the Kinect launching to high demand and potentially changing the way consumers play games at home.

In fact, Microsoft’s Xbox unit is so confident in Kinect that it upped its sales target for the new gaming system from 3 million to 5 million units through the end of the year, due to pre-sales from retailers and consumers.

The Kinect goes on sale in Europe and Japan on Nov. 20.

In development for the past three years, device officially launched in New York City’s Time Square on Wednesday night with a splashy street fair in front of Toys “R” Us complete with 600 dancers clad in Kinect’s purple color scheme. Expect it to be one of Microsoft’s biggest launch efforts, with millions spent on TV and other media, demos at retailers, traveling tours, as well as pair ups with partners like Burger King.

While Microsoft wouldn’t disclose just how much money the company is spending on the launch, “This is a large investment for us,” Don Mattrick, Microsoft’s president of interactive entertainment, told Daily Variety. “It’s bigger than the amount of money we spent to roll out the original Xbox 360. We’re bringing something that’s completely new to the space that no one else has ever done before.”

Microsoft is also spending the extra coin to use the roll out of Kinect as a way to “relaunch our brand,” Mattrick said, considering Kinect requires the Xbox 360 and revamped Xbox Live interface, which has long featured Netflix, but now also Last.FM, a Zune Marketplace and an ESPN sports channel.

Kinect is competing with Sony’s PlayStation Move, which like Nintendo’s Wii requires gamers to wave their arms while holding a wand-like controller to play games, rather than smash buttons on a handheld device the way traditional consoles have required in the past. The motion-sensing Kinect, however, removes the need for any controller at all and turns the gamer’s full body into the controller, similar to what was seen in “Minority Report.” It’s also voice activated.

“For the longest time, gaming was based on input from your hands or your thumb,” Mattrick said. “But they’re not a good substitute for you. There’s no barrier or prior experience required. It’s simple and fun for everyone.”

Nintendo’s Wii has dominated sales in the casual gaming category for years, since it was introduced in 2006, but Microsoft and Sony’s entry into the market is expected to create the latest war between the console makers for consumers’ wallets.

So far during its first month, Sony has sold an estimated 1 million units of the Move in the Americas and another 1.5 million overseas, topping expectations and forcing the company to crank up output at its factories. Sony is also estimating it will sell 5 million units of the Move through the holidays.

Analysts are downplaying the estimates, however, with Intl. Data Corp expecting sales of the $150 Kinect to come closer to 2.5 million to 3 million units in the U.S., while the Move shakes up sales closer to 2 million.

Nintendo’s Wii has sold more than 10 million units.

Kinect, of course, is Microsoft’s attempt to go after the family audience that embraced the Wii, and not just hardcore gamers.

“It’s as broad as it can be,” Mattrick said. “Everyone gestures, everyone moves and everyone speaks. (Kinect) is not targeting a particular age group or gender.”

What should help Microsoft is the fact that the Kinect will work with the 45 million Xbox 360s sold to date. It’s launching with 17 games, including a slew of kids, sports, action and dancing games, and the first installment of the “Harry Potter and the Deathly Hallows” game. The number is one less than what the Xbox 360 bowed with. Moving forward, most new Xbox games will be supported by Kinect, Mattrick said.

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