Microsoft is celebrating the successes of its Xbox 360 console in 2011 this week. But truth is, 2011 was a down year for the broader industry, according to the market researchers at NPD that are also the sources for Microsoft's cheering. Does that color the Xbox 360's relative strength in any way?


First, the good news.

(This is all US-based information.)

It was a great year for the Xbox 360, as Microsoft claims. The 360 was the best-selling video game console for all 12 months of the year, thanks in part to renewed excitement in the console due to the Kinect and, possibly, the late 2011 media update. But let's not forget the relatively short life of the Nintendo Wii, which wasn't exactly a technical marvel when it was released in 2006.

The Xbox 360 capturing 49 percent of consumer retail video game spending, was the fastest-growing console of 2011, and had an industry-leading $6.7 billion in sales for the calendar year, with more than $2.1 billion spent on consoles and $4.6 billion on games and accessories.

Microsoft has now sold over 66 million Xbox 360 consoles since its 2005 launch. It's also sold over 18 million Kinect sensors. With a bit of wet-finger-to-the-wind guessing, I'd estimate that 30-40 percent of the installed base of 360 users is also using Kinect. That is damned impressive, actually. It might even be higher: According to Microsoft, there are 40 million Xbox LIVE members, and that has to be pretty darned close to the exact number of active Xbox 360 users overall. Are almost 50 percent of Xbox 360 customers also using Kinect? Almost certainly.

Microsoft describes December as "strong," which is interesting given the information I'll provide below. But it was responsible for "about half of December's retail spend on games, consoles and accessories," for a total of $1.5 billion. The company sold 1.7 million units in December, and the 360 had seven of the top 10 console game titles, which include “Call of Duty Modern Warfare 3,” Elder Scrolls V: Skyrim,” “Battlefield 3,” “Assassin’s Creed: Revelations,” “Just Dance 3,” “Kinect Sports Season Two” and “Dance Central 2”. For all of 2011, it had 6 of the top 10. Yes, COD:MW3 was number one overall.

But. There's always a but.

As I wrote in today's Short Takes, the video game industry took a pounding during this oh-so-successful year for the Xbox 360. According to NPD, video game sales fell 21 percent in December to $3.99 billion, despite the success of MW3 and the Xbox 360. Hardware sales, overall, were down 28 percent in the month, and software sales fell 14 percent.

In fact, the whole year was down. NPD says that total video game sales, which include hardware, software and accessories sales, was just $17.02 billion in 2011, a fall of 8 percent from the $18.59 billion it racked up in 2010.

So I'm not sure how to take all this. The Xbox 360 had a great year, but the wider industry is down, almost certainly because of the age of the current consoles, which are experiencing a longer-than-ever lifecycle. Hopefully, we'll see a Xbox vNext announcement at E3 this year.