At a gaming event at Tokyo’s UK Embassy, the developer shows off a trailer full of realistic bullets, blood and gore.

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The game in question, called “Redwood Falls,” doesn’t have a publisher yet, but Kuju showed it off at a gaming event in Japan to demonstrate the realistic physics behind blowing every piece of an enemy’s body off with gunfire. Gruesome? Yes. An indicator of an awesome game in development? Quite possibly.

Seriously, though, this is kind of gross. But it must have been pretty cool as far as graphics go. Here’s what IGN had to say:

The clip showed what appeared to be an enemy creature being blasted with gunfire. The enemy body reacted realistically to the fire, with positional damage leaving open wounds that exposed detailed innards, right down to the bones. With enough damage, body parts started falling off. Instead of collapsing to the ground from the beating, though, the enemy’s body regenerated itself, returning to original form.

The developer goes on to say that the game isn’t about “destruction,” but “regeneration,” whatever that will eventually mean. We just hope it involves zombies.

• Kuju Works on PS3 [IGN]
• Famitsu’s coverage and screenshots [Japanese]

The bright spot in an otherwise underwhelming quarterly report — we get to play more games at launch.

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Activision’s CEO made some big PS3 announcements in his conference call about the company’s sub-par holiday earnings — the publisher plans to release three unnamed PS3 titles at the system’s launch.

This is all slated as part of the company’s April 2006 - March 2007 release schedule (that’s Fiscal Year 2007 for you economy gurus), and the company threw a Nintendo Revolution launch title into the mix for that time frame, too. Unfortunately it doesn’t give us much insight into when Sony plans to release the PlayStation 3, but we’re glad to see Activision officially on board.

And though we don’t know the names of the games yet, Gamespot suggests that they’ll be long-time franchise titles, since the original Gun for Xbox 360 has returned disappointing results.

• Activision readying one Revolution, three PS3 launch titles [Gamespot]

You know, we doubt they get any comfort from stock analysts saying that “it probably can’t get much worse from here.”

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Like Electronic Arts before them, Activision has turned in slumping sales figures for the holiday season, and for all the same reasons. But in a somewhat comforting analysis, The Motley Fool concludes that things are about as bad as they can possibly be, and that the ramp-up of Xbox 360 and the introduction of PS3 and Nintendo Revolution will bode well for the publisher’s future.

And while new titles such as True Crime: New York City (current-generation consoles only) and the western shooter Gun disappointed this past quarter, the jaw-dropping Call of Duty 2 for the Xbox360 — the best-selling Xbox360 game since launch — hints that Activision will be a heavyweight.

Activision as a heavyweight really shouldn’t shock anyone — but, hey, if you’re thinking about buying some stock, read on.

• Has Activision Bottomed Out? [MSNBC/Motley Fool]

Our buddies at KeithWardMusic.com are running a great promotion and giving away an iPod shuffle, so we thought we’d help ‘em out.

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The premise is simple, and it goes something like this:

• Put Keith’s link in your AIM profile.
• Enter the contest for free.
• Get a chance to win the iPod.

Keith does piano-driven rock, sort of a Ben Folds or Dave Matthews style. In September, his song “E. 25th” was the iTunes free download of the week, and he’s had more than 80,000 downloads since then.

The drawing is on Feb. 22, so go check out KeithWardMusic.com, and if you dig the band, do your part spread the word by donating a small piece of your profile. Hopefully it’ll pay off, and you’ll be one iPod richer.

Because you’re probably wondering, we really are friends, and this really is legit, not a paid advertising scam. If things go well, there will be more giveaways coming up soon. Enjoy!

• Keith Ward Music [Listen to the full CD, and check out the band]
• Spread the word, win an iPod [Enter the giveaway from this page]

Another round of hand-wringing from the newspapers, plus the future of online gaming and some interesting 2006 predictions.

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• We don’t mean to harp on the issue, but the Los Angeles Times has a nice package about the short supply of Xbox 360s and the outlook for Microsoft’s head-start on Nintendo and Sony. Here’s an excerpt:

“Steve Jobs will announce a product and it will ship that day and be in pretty good supply,” said Geoff Keighley, a host on G4, a cable channel devoted to video games. By comparison, Keighley said, Microsoft created “an object of desire they weren’t able to deliver to the vast majority of people who were intrigued.”

The story also breaks down Xbox sales by region, as of Dec. 31. It’s 900,000 for North America, 500,000 in Europe and 100,000 in Japan. [L.A. Times / Tribune]

• Meanwhile, Reuters delves into online gaming, which is apparently “growing up” and moving to consoles in a big way. Speaking of growing up, we noticed that all the gamers interviewed in these stories (three of them) are in their mid- to late 20s. Glad to see we’re growing old in style.

David Cole, president of DFC Intelligence, a video game market research firm, estimates that less than 5 percent of console owners now connect for online play on a regular basis. He said that number could hit 10 percent in the next two years as next-generation units debut.

And here’s one more canned quote: “This will be the online generation.” Stop the presses. [Reuters]

• We’ve got one more analyst’s musings to throw out there — some guy says that 360 shortages will continue into the summer, making it all the more a “hot item.” To be fair, we’re beyond the hotness and ready to play some games.

The same analyst, for what it’s worth, predicts Nintendo’s Revolution will debut at $200, as opposed to the less precise official line: “less than $300.” [GameSHOUT]

THQ’s profits dropped, but they still beat analysts’ estimates. The trick: heavy on handheld games, and no love for Xbox 360.

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On Thursday, Electronic Arts released disappointing results for the third quarter of the fiscal year, which covers the three months ending Dec. 31. Their game sales missed Wall Street’s expectations, partly because there just weren’t enough Xbox 360s out there to support the number of games the publisher needed to sell.

Though THQ also performed poorly in comparison to the 2004 holiday season, they managed to beat the Street’s expectations by a long shot — the publisher earned 72 cents per share on expectations of 65. So what’s the difference? THQ chose to focus on current-gen games, particularly handhelds, and they stayed away from the Xbox 360 altogether. About 1/3 of THQ’s sales came from handheld games; just 5 percent came from current-gen Xbox games.

So, we won’t get you too bogged down in stock analysis, but maybe this is the bright spot in the gaming industry’s not-so-merry Christmas. Things will be better for everyone next year.

• EA Misses, THQ Hits [The Motley Fool]

PlayStation Magazine sends some more anonymously sourced PS3 news our way — this time, it involves DVR and PSP.

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The other day we reported on a PSM story that has been scanned onto the forums — the first page discussed Sony’s plans for a ‘full-on assault’ against Xbox Live. Today we get the second half of the story, complete with a healthy dose of skepticism.

PSM (if that is their real name) quotes a source close to the PS3 saying that the console will come equipped, at least in some form, with DVR (i.e., TiVo) features, and that it’ll have all sorts of cool hookups to iTunes-like downloading services. On top of that, the media you collect on your PS3 will be transferrable to the PSP, which will beam things around, and so on and so forth.

Fact is, we don’t really know the validity of all this, but it’d be pretty cool. Both Engadget and Ars Technica have detailed their skepticism as to the legitimacy of the source’s claims (and, judging by the spelling of “Blue-ray,” the validity of the mag scans themselves). We’ll let you check it out for yourself, and hope for the best while preparing for the worst. See ya out there.

• More PlayStation 3 info leaked? [Engadget]
• PlayStation 3 to have DVR capabilities? [Ars Technica]

Well, can’t say they didn’t warn us. But Electronic Arts missed even the downgraded estimates for their quarterly profits.

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EA’s profits for the 2005 holiday season were down 31 percent from the same period in 2004. And even after announcing that Wall Street should lower expectations for the quarter, the world’s largest gaming publisher still missed analysts’ expectations — they earned 83 cents a share rather than the expected 90. Last year, EA earned $1.18 per share during the holiday quarter.

EA also announced yesterday that the company is laying off between 325 and 350 workers, about 5 percent of the work force.

“This is a period that’s bittersweet,” Warren Jenson, EA’s chief financial officer, said Thursday in a phone interview. “There’s a lot of positives that will take place this year, but there will be lots of challenges, too.”

• Electronic Arts profit slides 31 percent [Business Week]

On the eve of Electronic Arts’ quarterly report to Wall Street, the Times highlights the 360 shortage and the rise of used game sales.

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The New York Times focuses on the problems facing the gaming industry today, using EA’s impending quarterly report, which the publisher has already said will miss estimates, as its peg to current events. The article delves into two problems that hit console publishers hard during the holiday season: the shortage of Xbox 360s and the popularity of used game sales.

We know that there weren’t enough Xbox 360s out there to propel EA and Activision to their goals for the quarter, which is always the industry’s biggest of the year. Not enough systems, not enough games sold. The article also explains how Gamestop, which has cornered the market on trade-in games, has hit publishers hard. Actually, how hard it hits depends on who you ask.

“The used games business does not cannibalize sales of newer video games,” Daniel A. DeMatteo, GameStop’s vice chairman and chief operating officer, said in an interview. “As a matter of fact, it does somewhat the opposite. We continuously increase the market for new games by allowing customers to trade in games that they are no longer playing. The used games business puts currency in people’s hands.”

Take Two chimes in at the end of the story with a lighthearted (but obviously true) dissent.

“We would prefer that retailers only sold new games,” he said, “but we’ve learned to make peace with it.”

Meanwhile, there have been rumors kicking around that the PS3 would somehow detect resold games and not play them. How exactly they plan to accomplish this, we’re not sure, but it seems like artificially closing such a huge market (Gamestop could make $1 billion in used game sales this year) is the wrong way to go.

• A Bright Spot in the Dim Video Game Picture [NYT]

So much for our visit to Japan. Sony has announced it’s shutting down most of the Ginza PlayStation lounge in Tokyo.

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The closing, scheduled for Feb. 28, seems to be a cost-cutting measure by Sony. We don’t know much about the lounge in question, but apparently the PlayStation Square on the first floor will remain open. If you’re into the whole multilingual thing, check out Sony Japan’s full post on the closing.

• PlayStation Japan [via Kotaku]