Microsoft touts Xbox sales but laments online woes

By Scott Hillis

SAN FRANCISCO (Reuters) - Microsoft Corp  sold 4.3 million Xbox 360 video game consoles in the last three months of 2007, helped by hit titles such as "Halo 3" and "Mass Effect", according to company data released on Thursday.

But the software giant also said it was "disappointed" with problems that had plagued its online gaming service for days and offered a free downloadable game to more than 8 million worldwide users of the network.

A total of 17.7 million Xbox 360s had been sold worldwide since it first went on sale in late 2005, Microsoft said. Earlier sales data from the software giant showed 13.4 million consoles sold by the end of September.

"Holiday 2007 was a blockbuster season for the gaming industry," Microsoft said, adding that the Xbox 360 has kept its lead over rivals in terms of total dollars spent on hardware and software.

Microsoft competes against Nintendo Co Ltd's  wildly popular Wii and Sony Corp's 6758.T PlayStation 3 consoles for dominance in a global video game industry that is thought to have approached $40 billion in revenue in 2007.

Nintendo and Sony have not released holiday sales figures for their machines, but by the end of September, about 13.2 million Wiis and 5.6 million PS3s had been sold globally.

Microsoft has counted on its Xbox Live online service to set its console apart from rivals. The service lets users download hundreds of games, as well as television shows and movie rentals.

But gaming Web sites and forums have been filled in recent days with complaints from users frustrated by not being able to sign on to the service or play online.

Xbox Live General Manager Marc Whitten said the problems stemmed from a "massive increase" in new users of the service over the holiday season, when sales of video game hardware and software surge.

"While the service was not completely offline at any given time, we are disappointed in our performance," Whitten said in a statement, adding that Wednesday had set a record for the number of users signed on simultaneously.

Whitten said that as a gesture of thanks to customers, all Xbox Live members around the world will be able to freely download one game over the service. Games sold on Xbox Live typically cost from $5 to $20, and Whitten said details of the offer would come in the coming weeks.

Before the holiday sales surge, Xbox Live had more than 8 million members, many of whom were paying $50 a year for the premium service that lets them play online against others.

The company also said "Halo 3", the final installment of its popular sci-fi shooting game that went on sale in late September, had sold 8.1 million copies by the end of the year.

Another Microsoft title, epic sci-fi roleplaying game "Mass Effect", had sold 1.6 million copies since its late November release. The games typically cost $60 per copy.

Microsoft's announcements came ahead of the annual CES in Las Vegas this weekend, when Chairman Bill Gates and other executives are expected to give a peek into the future of the company's products, including the Xbox 360.

(Editing by Paul Bolding)