SEATTLE/NEW YORK (Reuters) - Microsoft Corp is expecting to sell 5 million of its new controller-free Kinect gaming systems this holiday shopping season, potentially adding $750 million to the software company’s revenue this quarter.
The $150 device, which plugs into Microsoft’s Xbox gaming console and allows users to play games simply by using gestures and voice commands, goes on sale at midnight in 30,000 stores across the United States.
Microsoft is hoping to challenge Sony Corp’s Move and Nintendo Co’s Wii in the expanding motion-based gaming market, and reinvigorate the $60 billion global video game industry, which has been hit hard by the economic downturn.
In September, the company forecast 3 million Kinect sales, but the head of Microsoft’s entertainment unit Don Mattrick raised the projection to 5 million in an interview with Reuters on Wednesday.
“Presales have exceeded expectations,” said Mattrick. “People are coming to us and saying this is must-have holiday item.”
High demand for the Kinect may lead to shortages, Mattrick warned, which could crimp sales.
“We’re anticipating that some of our partners will be sold out at points of time this holiday, and that’s something we’ll do our best to work through,” he said.
There will be midnight events at 5,000 U.S. stores to mark the launch of the new product. By late-afternoon, about 100 people had formed a line outside Toys R Us in New York’s Times Square, where Microsoft is holding a splashy launch and is giving away free games to early customers.
Overall, more than 30,000 U.S. stores will sell Kinect, including branches of Wal-Mart Stores Inc, Target Corp, Best Buy Co Inc, GameStop Corp and online at Amazon.com. It goes on sale on November 10 in Europe and November 18 in Asia.
Microsoft, which unveiled the system under the project name ‘Natal’ last year, is selling Kinect for $150 or as part of a package including a 4 gigabyte Xbox for $300.
The device itself is a roughly foot-long, thin black box with three camera sensors, which plugs into the back of the Xbox. It comes with one set of games called ‘Kinect Adventures’, scenarios where players navigate courses on fast-flowing rivers, underwater and in space.
There will be 16 other games available for the holidays, Microsoft said, including sports, dancing and fitness-themed titles.
Sophisticated shooting games like Microsoft’s Halo series are not expected to be available on the Kinect, as the company is aiming to spread the appeal of hands-free gaming to a wide audience rather than attract existing hardcore gamers.
Ultimately, Microsoft is hoping the new technology will help extend the role of its Xbox, which has sold 45 million units in the decade since launch, and introduce a concept that is expected to feature in forms of electronics and computers in the next few years.
If Microsoft hits 5 million Kinect sales, it would generate at least $750 million in new revenue, and likely spur more Xbox sales. Analysts expect the company to report $19.1 billion in revenue for the current quarter, according to Thomson Reuters I/B/E/S, up slightly from $19 billion in the year-ago quarter.
Microsoft shares fell about 1.1 percent to $27.08 on Nasdaq late Wednesday afternoon.
Reporting by Bill Rigby in Seattle and Liana Baker in New York; Editing by Gunna Dickson and Richard Chang