“Modern Warfare 2” is proving to be a benevolent king of the video game hill.

The positive effects for Activision and its shareholders are pretty obvious. When you sell $550 million worth of games in five days, everybody’s happy. But Microsoft is seeing a big bump as well.

Last week came word that 2 million people had concurrently logged on to Xbox Live to play the game. Now we’re learning that 2 million XBL users have logged on to Facebook in the first week of the dashboard update.

Now, admittedly, the line between MW2 and Facebook is a little crooked, but a sizable percentage of the XBL members were there to play MW2 – and likely sniffed around the new features while they were there. (The company did not reveal the number of people who had logged on to the Twitter via Live feature.)

Meanwhile, the cash train could keep chugging along, as one analyst – Ben Schachter of Broadpoint AmTech – says Activision will generate at least $100 million - $140 million in gross revenue from the sale of MW2 downloadable content. 

Spike TV’s not going to have all the fun this awards season. Machinima.com today will announce a video game awards show called the Inside Gaming Awards – based on the site’s existing weekly program. Awards will be selected Dec. 11 – the night before Spike’s awards – and aired on YouTube on Dec. 15.

The show won’t have celebrities or the other television niceties. Befitting its network, it will be completely hosted through machinima videos. All totaled, the awards will cover 18 categories, ranging from the usual suspects to “Best DLC” and “Best Replayability”.

Nominees will be eligible for two separate awards – one bestowed by the Machinima.com judges and a “Gamer’s Choice Award”, which will be chosen by community votes cast between Nov. 27th and December 7th.

Machina’s YouTube channel is a thriving one. The company says video views on the channel currently total 700 million

Nominees (which will be announced on the Nov 27 edition of “Inside Gaming”) are listed after the break:

Five years ago today, massively multiplayer online Happy games changed forever.

At the time, we thought the number of players being pulled in by titles like “EverQuest” – with roughly 750,000 subscribers - were mind-boggling. We had no idea.

It was on this date in 2004 that Blizzard Entertainment unleashed “World of Warcraft” on the gaming world. Coming on the heels of the then just-released “EverQuest II,” it was expected to do well. Heck, given Blizzard’s pedigree people were pretty sure it would top the EQ numbers by a fair margin. But even the most avid fanboy couldn’t imagine that five years down the road, the game would have over 11.5 million active players.

To put that in perspective, if you added up the entire populations of Puerto Rico, Hong Kong and Luxembourg, you still wouldn’t equal the number of people carrying on the fight of the Alliance and Horde.

The game shows no sign of weakening – and the upcoming expansion pack “Cataclysm” (expected next year) is only likely to drive lapsed players back to the game. And waiting in the wings in the coming years is a new MMO from Blizzard.

So happy birthday night to the elves, dwarves, orcs, gnomes and you undead types. Enjoy the in-game celebration, your new pet (current subscribers will get an "Onyxian Whelpling") and whatever else the Blizzard team has up its sleeve. It’s been one hell of a ride – and it’s doesn’t look like it’s going to slow down anytime soon.

Sony’s plans in the 3D TV space have been known for a while now, but the company has finally confirmed rumors that the PS3 is going to be tagging along for the ride.

In a presentation accompanying its earnings report today, Sony noted that it would “release 3D games in line with Sony’s 3D strategy” and that “all PS3 units will be firmware upgradeable to 3D”.

In and of themselves, the two lines are fairly benign. But when looked at in conjunction with the company’s larger ambitions, 2010 is getting very, very interesting on the 3D front. Establishing formats to bring 3D into the home and 3D gaming on the PS3 are the company’s top two goals.

We’ll know a little more about timing in January at CES, but it’s a pretty safe bet that Sony will prominently feature at least one AAA 3D game at E3 next year. There’s no faster way to create enthusiast excitement – and begin the rollout of the new sets. 

Full disclosure up front: I’ve got a little history with the Spike VGAs. In 2004, I was a member of the advisory committee, helping the network pick the nominees and winners for several categories.

I quit the board the next year, on ethical concerns, since the network was insisting that judges and advisors nominate and vote on games that weren’t yet released – and no one had been able to play in full.

This was long before gaming journalist Geoff Keighley started working for Spike. The awards are very much on the up and up these days. And they’ve truly becoming must-watch events for gamers.

The 2009 edition looks to be another bump in quality - and buzz. Bungie and Microsoft will give players their first look at “Halo: Reach” this year – and other exclusives will be revealed in the days leading up to Dec. 12, when the show will air live at 8pm.

The nominees (full list after the break) are a solid bunch as well – with “Uncharted 2” leading the pack with eight nominations. Players can vote on their favorites now at the VGA site.

Pandemic Studios has been always been something of a stepchild at EA, so when the company announced plans to cut 1,500 jobs last week the rumors started swirling. Today, they were sadly confirmed.

EA is essentially shuttering the development house – laying off 200 people and shifting the remainder to its Los Angeles studio. The Pandemic Studios brand will continue to be used, however.

Pandemic came on board at the same time as Bioware, after Elevation Partners merged those two companies together in 2005. John Riccitiello, at the time a managing director at the VC firm and currently CEO of EA, ran the holding company – so it was no surprise when EA bought the merged company two years later – though the $860 million price tag did raise some eyebrows. .

They’ve put out some good games – including “Mercenaries,” “Star Wars: Battlefront” and the upcoming “The Saboteur” – but have never had a true blockbuster hit, which probably sealed their fate.

It’s a sad fate for a really talented group of game-makers. 

September saw a brief respite from the bad news, but October brought it in spades for the video game industry.

Sales of video game software dropped 19 percent, compared to a year ago to $573 million. Hardware was even worse, falling 23 percent compared to a year ago to a little shy of $381 million. That was particularly worrying, since all three systems announced price cuts recently.

The news was particularly grim for Sony from a pure numbers standpoint. The company sold just shy of 321,000 PS3 units – a 33 percent decline from September (although it was a 69 percent improvement from 2008).

 Microsofts old just under 250,000 Xbox 360s, while Wii sales spiked to 507,000 units sold. That was better than September, but not enough to match the 2008 numbers – when 803,000 Wiis were sold.

As for games, “Uncharted 2” led the pack – but the real story was “NBA 2K10,” which sold 524,000 copies on the Xbox 360 and PS3 versus a measly 141,000 units for EA’s “NBA Live 10.

The full top 10 is after the jump.

 

When a game can make the launch of “Halo 3” look rather pedestrian, that’s saying something. “Modern Warfare 2” is one of those games.

Activision has released day one revenue of $310 million on sales of 4.7 million copies – IN JUST TWO AREAS. Those numbers only factor in the North American and U.K. markets – granted those are two of the biggest markets for video games, but Central American and rest of Europe are hardly tiny.

Tuesday, meanwhile, was Xbox Live’s busiest day ever, according to Dennis Durkin, chief operating officer of Microsoft’s Interactive Entertainment Business – with over 2 million concurrent players.

One more? Over 10,000 stores held midnight openings when the game went on sale. That’s a lot of sleepy clerks. 

The gaming industry’s leading brick and mortar retailer has an intriguing plan to take advantage of the growing digital distribution field.

GameStop COO Paul Raines, speaking at the BMO Capital Markets entertainment conference today, detailed plans for the company to install kiosks in its stores next year, letting people buy digital add-ons for titles as they buy the retail game.

In other words, as you buy a game, you’ll also be able to purchase add-ons for Xbox Live and your PS3 and have them waiting when you get home.

It’s a unique take on digital, but there is a method in what some may see as madness. GameStop plans to leverage the relationship its store clerks have with customers to upsell add-on packs – boosting the bottom line for them, publishers and console manufacturers.

“We believe we can convert a significant portion of our in-store traffic to digital downloads for publishers,” said Raines.

For hardcore gamers, there is an upside here. You’ll be able to use your trade-in credits for add-on content.

GameStop will begin in-store testing the concept in the first quarter of next year.

Oh – and as for full game downloads? The company still isn’t too worried about those.

“We believe a large market for full game downloads is not imminent in the near future,” said Raines.

Tuesday’s launch of “Call of Duty: Modern Warfare 2” was already being forecast as the entertainment event of the year, but even that may have been underselling things.

ELSPA reports that first-day sales of the game hit 1.23 million copies in the U.K. That’s roughly twice the number that “Grand Theft Auto IV” posted last April. Ben Schachter, an analyst at Broadpoint AmTech (and one of the brightest guys covering this industry) notes that if that 2:1 ratio is equaled in the U.S., it’s possible the game sold over 7 million units in a single day. That would work out to $420 million in revenue – the biggest one-day haul in the entertainment industry’s history.

Following the math, “MW2” could see first week sales of 11.7 million – which would blow out all of the economic models for the game. (Analysts were looking for sales of 12 million or so copies in the entire fourth quarter.)

Looks like the millions Activision spent on marketing the game during the NBA finals and Sunday Night Football have paid off in spades.