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Xbox's David Dennis on December NPDs, 'best month ever for Xbox 360 hardware sales'

Xbox 360 had a good year. It could've been exclusive hits like Halo Reach, which landed in the No. 3 spot on the top selling games of 2010, according to NPD. Or it could've been the Xbox 360 S console refresh which, since its unveiling at E3 last June, has remained on top of the monthly home console sales numbers for an impressive six months straight. Or maybe it was the Kinect, which shipped a whopping eight million units by the end of the year, and sold well over its five million unit goal.

In actuality, it was all three, and Xbox's David Dennis was making the media rounds tonight to talk about it. "We're super pleased with the response we saw," Dennis said, "and we're just working hard to get supply back on the shelves and keep January and February on track as well." During the second half of the December, Dennis said Microsoft resorted to air shipping consoles in to meet customer demand.

"For us, the focus was trying to get as much on the shelves before that last push before Christmas. It's not cheap to do things like that but we've got a bunch of really smart MBAs to figure out the right balance when to shift back to our traditional process." That traditional process is the far more affordable, but far slower, ocean-based freight. It's not like there aren't any more Xboxes to go around, retailers will simply have "fewer than [they] normally would have."

These [Kinect] games have a lot of staying power, especially ones like Kinect Sports and Dance Central- David Dennis

With both the Xbox 360 and Kinect selling so well in December, it was surprising to learn that no Xbox 360-exclusive titles made it to the NPD's list of top 10 sellers for the month. Dennis says that, internally, they don't compare themselves to handheld titles, so on his list he's got Kinect Sports at No. 8. NPD analyst Anita Frazier says, "On an SKU basis, games that are in the top 10 for the month that aren't reflected in our title-level best-selling list include Kinect Sports [...] and Dance Central from Microsoft."

Though Ubisoft managed to get similarly casual Wii-exclusive titles Just Dance 2 and Michael Jackson: The Experience into the top 10, on a per SKU basis (removing the weighting given to titles like Madden NFL 11, which shipped on five separate platforms) Microsoft did have two hits with Kinect Sports and Dance Central, on a platform with a much smaller install base than the Wii. "These games have a lot of staying power, especially games like Kinect Sports and Dance Central," Dennis said. "They're highly social, a lot of fun for parties and that sort of thing. They'll continue to attach strong to Kinect through its life cycle."

Another major source of Microsoft's great year for Xbox? Digital. While a lot of that money is spent exclusively online through Xbox Live, points and subscription cards "grew the most in unit volume vs. 2009" for both December and for all of 2010, according to Frazier. Dennis says, "our transactions over Xbox Live are generating more revenue than our subscriptions, so if you do some napkin math [...] you get to some pretty big numbers pretty quick." With over half of the 30 million Xbox Live members paying to be Gold members, that gets you roughly $750m per year in subscription revenue alone. And Microsoft is generating more revenue from Xbox Live transactions. At that scale, it's easy to understand why points and subscription cards would be strong retail performers, contributing to the impressive $6.2 billion spent by consumers at retail in 2010.

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