The Kinect Effect – Microsoft Video Game Division Grows by 55 Percent


The extreme popularity of Microsoft’s Kinect motion-sensing device has rejuvenated the company’s video game division. Microsoft’s Entertainment and Devices division; which handles all gaming consoles and MP3 players, had revenues amounting to $3.7 billion for the quarter ending December 2010 as compared to $2.4 billion in the same quarter last year; a solid growth of over 55 pct.

Microsoft’s gaming division has faced many years of losses and sluggish growth. The recent introduction of the motion-sensing Kinect add-on for XBox 360 seems to have turned the situation on its head. The Kinect has also spared Microsoft the agony of releasing a new gaming console in order to keep up with the competition. Microsoft’s flagship gaming console – the XBox 360 was released way back in 2005 and is over 6 years old. Acknowledging Kinect’s importance to Microsoft, CFO Peter Klein said in a conference call held last month that, “Kinect is the fastest selling consumer device in history.”

The introduction of Kinect has also salvaged the XBox 360 – the company sold 6.3 million Xbox 360 consoles in the holiday season this year registering a growth of 21 pct over last year. Microsoft’s Xbox Live service attracted 30 pct more subscribers in Q2 2011 taking the total subscriber base to an astounding 30 million users.

Microsoft’s Kinect sold more than 8 million units in just 60 days after its release and the company expects its sales to remain buoyant going forward. Capitalizing on the Kinect’s popularity, Microsoft has decided to release a Kinect-compatible version of its Windows operating system in the near future.

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