Halo Reach was a contributor to Microsoft’s positive financials.

OCT. 29, 2010 • Microsoft’s Entertainment and Devices division rides into the holiday season with good tidings. Xbox 360 console sales were up 38 percent for the quarter ending Sept. 30, with 2.8 million units sold. The  division reported quarterly revenue of $1.8 billion, up 27% from 2009. Boosting revenue was the mid-September release of Halo Reach, that generated $200 million in its first 24 hours. In more good news, 10 days after launching its new $150 Kinect hands-free controller, Microsoft reported retailers had sold more than 1 million units worldwide – putting the company on track to meet or break its 5 million unit sales target by Dec. 31.

Impact: In terms of hardware units, the Xbox 360 has significantly outperformed DFC forecasts in 2010.  It is clear that with the Kinect, Microsoft should continue to have strong sales through the fourth quarter. On the downside there has not been the pickup in software sales that should occur with such strong hardware sales.  Top titles like Halo Reach and Call of Duty: Black Ops continue to have huge sales, but there has not been a major software lift for products outside the top 20.  It is suspected that a large portion of the Xbox 360 systems being sold are replacement units and thus the Xbox 360 is not seeing the typical software lift that would come from truly new users.