• by Shankar Gupta , December 8, 2006

According to numbers released this week by the NPD Group, Sony's PS3 is limping into the holiday shopping season in third place. The company sold 197,000 consoles in November, compared to Nintendo's 476,000 Wiis and Microsoft's 511,000 Xboxes. Largely because of the inclusion of the Blu-Ray drive, which Sony is hoping will be its competitive edge over its console rivals, the company's only been able to supply a trickle of consoles into the country. So it's looking very, very unlikely that Sony will make its target of a million PS3s sold before the end of the year.

The Blu-Ray is also ending up as a minus for many consumers. They pay the extra money, but without another couple of grand sunk into a high-def TV, it's just wasted. Sony banked on this format, and every day that passes makes it look like a bad bet-- especially when its competitors' heavy investments in online are paying off beautifully.

A perfect example of online gaming's happy results for Microsoft is the dramatic effect that "Gears of War" has had on both Xbox sales and Xbox Live traffic. A report by Sandvine found that "Gears of War," a shooter produced by Epic that recently sold its millionth copy, has been instrumental in driving traffic on Xbox Live up by a whopping 80 percent.

Getting more people on Xbox Live is a revenue driver for Microsoft, which charges for subscriptions and sells content through the Marketplace. But another major lure of online games is the massive potential for viral marketing involved. If I go to a friend's house and see him playing a solo game, I might be inclined to get it, if it looks sharp enough. But games with intense multiplayer appeal create evangelists--after all, your friends are playing online, so why should you be left out of the fun? This effect doesn't just push up sales for games, but the consoles as well: NPD's analysts said that the success of "Gears of War," in part, helped push Xbox out of a sleepy summer, and towards Microsoft's goal of a million consoles sold in 2006.

The flourishing of "Gears of War" and the continuing success of Xbox and Xbox Live keep pointing at one truth of this generation of consoles: Games are becoming less about what you play, and more about whom you can play with.