H2 Ohhhh

As soon as the pre-orders for Halo 2 climbed past the million-unit mark, you knew that Microsoft (Nasdaq: MSFT  ) would have a hit on its hands. However, even the forecasters who were expecting the game to move between $50 million and $100 million on its first day of availability were left dumbfounded when it was announced that a record $125 million worth of the game was sold on Wednesday. That's roughly half of what the original has sold to date.

For Microsoft, having a video game hit just before the holiday shopping season kicks up in earnest is great news. Like Nintendo (Pink Sheets: NTDOY), Microsoft's Xbox is lagging behind Sony's (NYSE: SNE  ) PlayStation 2, and it will be proprietary titles like the Halo sequel that ultimately sway consumers considering which console or consoles to buy.

The key word there is proprietary. While Motley Fool Stock Advisor recommendation Electronic Arts (NYSE: ERTS  ) makes some great games, they are typically made available on all platforms. What's worse for Microsoft and Nintendo is that when a third-party publisher doesn't want to port a popular title for all of the video game systems, it will usually just stick to where the established base exists, and that would be Sony.

So even if you think that Pokemon, Zelda and Super Mario are cheesy, one can argue that that's pretty much what keeps Nintendo in business stateside these days. That's why Microsoft needs Halo 2 so badly, because the video game market has typically tolerated no more than two video game systems reigning popular at any given time.

It's working now because all of the hardware players have deep pockets and are willing to lose money on their consoles to collect on the software. Yet, if a household has more than one system, does that mean that the software dollars are also being divided? Naturally.

That's why the timing -- and early success -- of Halo 2 is so important to Microsoft. While it's obviously a violent game geared toward older players (hint, if your six-year-old kid is scribbling Halo 2 with a crayon on his holiday wish list right now, you may want to check it out yourself first), these next two months are a heavy selling season for the video game industry.

With Halo 2, Microsoft is packing some serious heat -- and it's not afraid to use it.

Have you played Halo 2 yet? Which console do you think will gain market share over the holidays? Which one will fall behind? All this and more -- on the Video & PC Games discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz enjoys playing on all three leading consoles. Forced to choose, he'd probably be on the Xbox. He does not own shares in any company mentioned in this story.


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