We gave you our notes from a Q&A with Robbie Bach, president of Microsoft’s Entertainment and Devices Division, yesterday. Here’s a clip of him talking about Microsoft’s three screens strategy (PC, phone, TV) and what it means for the consumer.

After watching Bill Gates deliver Microsoft’s keynote address at the Consumer Electronics Show for 12 years, CEO Steve Ballmer finally got his moment in the sun on Wednesday.

We were rooting for you Steve, but next time, tell your friends not to steal your thunder.

First, it was Verizon CEO Ivan Seidenberg leaking the news that the U.S. phone company has picked Microsoft as its default mobile search provider. It’s a big win for Microsoft, which has been lagging behind Google and Yahoo on the Web, but Ballmer didn’t get to be the first to tell the world. Seidenberg stole the spotlight, announcing the deal at a Citi investor conference earlier on Wednesday. We were hoping Microsoft would take back the limelight by giving us more details when it was Ballmer’s turn at CES, but alas, all the CEO said was, “I’m also thrilled to announce a new long term partnership with Verizon to offer our live services on all Verizon phones.”

Besides the Verizon deal, Ballmer also announced at CES the beta test launch of Windows 7, Halo Wars, a Windows Live deal with Dell, and a bunch of other stuff. But most of it, while good news, didn’t seem to wow the crowds at the Palazzo Ballroom in the Venetian hotel.

The funniest moment of the keynote, in our opinion, was when Ballmer joked about the advice Bill Gates gave him for his first-ever keynote. Ballmer flashed a message on the screen from Gates that said “There are always two conventions going on during CES - make sure you go to the right one.” The other conference is the adult entertainment expo, of course (if you didn’t know).

He then followed with supposed messages from President-elect Barack Obama, disgraced Illinois governor Rod Blagojevich and others, including this faux gem from Yahoo CEO Jerry Yang:

“Why do you keep ignoring my Facebook requests?”

(Photos: Reuters)

Media mogul Sumner Redstone appears to be sticking with his decision to not sell more shares in Viacom and CBS. Here’s the Financial Times:

Media mogul Sumner Redstone has reached agreement with his daughter, Shari, to put some of National Amusement’s 1,500 cinemas on the block rather than the entire division, as part of debt-restructuring discussions to avoid selling more shares of Viacom and CBS, according to people familiar with the matter.

If lenders agree, the plan would clear the way to sell a part of the US group and 19 theatres in the UK. A prospectus is not expected to be released until early January, one person familiar with the discussions said.

It was not immediately clear how much the proposed partial sale would fetch. The entire chain is valued at $500m to $700m by analysts and at about $1billion by Mr Redstone.

This comes after National Amusements sold its stake in video game company Midway for $100,000 and a big tax writeoff.

As you’ve read here before, Redstone is trying to restructure about $1.6 billion in debt. Half of that, as the FT notes, is due December 19 (only 15 more shopping days until debt day!). Redstone is in this position after he blew a debt covenant that was tied to Viacom’s and CBS’s market value. Both stocks took a dive, which forced Redstone into selling $233 million in non-voting shares of both companies, the FT reported.

Meanwhile, we asked Regal Entertainment CEO Mike Campbell if he would be interested in buying National Amusements’ theater chain If Redstone does put it on the block. Cambell said their domestic theaters would be a good fit — but noted that the credit crunch could hinder financing.

Keep an eye on:

Our Reuters Media Summit: We’re heading into the last day, but have a look at our interviews with Sirius XM CEO Mel Karmazin, Microsoft videogame executive Shane Kim, Professional Golfers Association Commissioner Tim Finchem and more. We’ve been running Summit blog entries here on Mediafile, but they’re all in one convenient place at the Summit Notebook site too.

You can’t have too much Michael Wolff. Here’s Wolff in a video interview with me.,

Former New York Governor Eliot Spitzer, who resigned earlier this year after patronizing a prostitute, is entering the journalism world with a column at Slate.com, the online magazine owned by The Washington Post Co. Reported by Reuters, but broken by the New York Observer’s John Koblin.

(Photo: Reuters)

Able to use a computer? Check. High school diploma? Check. Work well with others? Check. Willing to strike a deal with Microsoft? Ummmm….

Indeed, in the hunt for the next top dog at Yahoo that last issue — whether the candidate can do a deal with Microsoft — may be the most pressing.

Since Yahoo’s announcement on Monday that Jerry Yang would step aside, the tech/media world has been abuzz with speculation about his replacement. Silicon Alley Insider is even running a terrific mock election — letting its readers vote among six candidates.

(News Corp’s Peter Chernin is one of them. Wouldn’t it be great if he got the job? It would let us spend some time chattering about what will happen over at Rupert Murdoch’s empire).

But as Anupreeta Das points out in the Reuters story, the only way Yahoo may be able to satisfy its investors is either a massive turnaround plan, which would be very difficult in this environment, or an M&A deal. And the best shot at a deal may be with Microsoft.

“Microsoft wants Yahoo’s search audience, the traffic, the clicks,” Needham & Co. analyst Mark May said. “They want to have as much as Google does. So it’s important for Microsoft to have a big presence in search and display.”

The upshot: Yahoo needs a CEO who is willing to negotiate. The trouble is that means it needs a CEO who would also be willing to possibly negotiate himself or herself right out of a job. Or go to work for Steve Ballmer. Hmmmm…

Keep an eye on:

• Dan Abrams, the former general manager of MSNBC, is launching a media-strategy firm, Abrams Research, to help business executives navigate public-relations challenges (WSJ.com)
• Procter & Gamble and Google are swapping some staffers — to help each other learn more about marketing (WSJ.com)
• Time Inc is expected to cut more than 250 from the payroll as part of an overall cost-cutting plan (NY Post)

(Photo: Reuters)

Wouldn’t you like to be Reggie Fils-Aime right now. Things probably couldn’t be better for the President of Nintendo of America — largely the face behind the popular “Wii” phenomenon — despite the global economic troubles.

While other executives speaking at the BMO Capital Markets Interactive Entertainment Conference today sprinkled words of concern into their otherwise upbeat addresses, Fils-Aime plainly and confidently said Nintendo is doing just fine, thank you very much.

Reuters talked to Fils-Aime about Wii availability, the DS handheld game, the future of ‘packaged’ games versus online games, and price cuts.

Reuters: Many of the executive speaking at the conference said they were cautiously optimistic about the video game industry during the holiday season. What’s your view?

Fils-Aime: If I look at this from an industry perspective, I think ‘cautiously optimistic’ is quite appropriate. If I look at it from a Nintendo perspective, i would say ‘very optimistic’. We have very strong products in the marketplace — both hardware and software. The Wii console continues to sell out, (and) on the DS side, we are at almost 20 percent growth year on year, on a record year in 2007. We have had very strong software growth, both console and handheld. And we have just launched Wii music (and) we are about to launch Animal Crossing. So we need to execute and continue delivering strong value and strong entertainment choices for the consumer, and if we do that we should have a robust holiday season.

During your presentation, you mentioned that the Wii had a “monster month” in October. Does that continue into November and December?

We certainly hope so. When I talk about a monster month it’s based on our own internal data for monthly sales in October. Later on Today the NPD (a research firm) data will come out — I am certain that it will reinforce the type of month we’ve had. It very well may be that for the month of October, our sell through on Wii may have been the best ever holiday sell through for the month of October on any console in American history. That’s what gives us the belief that if we simply execute we should have a strong holiday season.

That brings to mind the question of availability. Will your products be available this holiday season? Will there be long lines and sold out stores like there was last year?

We certainly hope not. Our goal is to have every consumer who wants a Wii console or a DS to be able find it during the holiday. We have increased by 50 percent the amount of product that is coming into the us, Canada, Latin America. We hope that that is enough product. But even with the strong sales that we have seen in October and so far in November, we are still suffering out of stocks. My message to the consumer is, if you see a Wii and you are interested in a Wii this holiday, buy it as quickly as you can.

Earlier in the conference there was a healthy panel discussion that contemplated the end of the line for “packaged” video games, and the advent of online gaming. Is that the future?

What nintendo has seen is a large installed base with strong innovatinve highly entertaining products sold at the right price. We can sell high volumes of software for very long periods of time. On the DS we have seen tat with Brain Age”, “Brain Age 2″, “Mario Kart”, new “Super Mario Bros”. For the Wii console we are seeing that for Wii fit, with Mario Kart. So we believe that there can be this concept of evergreen titles as long as the proposition is right.

Given that, one wonders if you ever need to develop a new console. How long does this generation last? Are there any plansto develop a new console soon?

We believe the role of a new console, a new system, is to bring great new entertainment ideas to life. We launched (the Wii and DS) those systems when we had great ideas that would benefit either from a touch screen or from a Wii remote. We will consider the launch of new consoles when we have got great new entertaining ideas that can only be done with a new console. As we sit here today the Wii console has a long run ahead of it, (the DS too). At some point we will launch the DSi here in the Americas. So as we look at the near term for us its all about maximizing the opportunity with the (Wii and DS).

Some suggest there will never be a next generation of consoles, due to the imminent rise of online gaming. Do you buy that idea?

I don’t buy some of the core propositions. We have seen with our own systems that the consumer wants an experience that today is better delivered via packaged content. There can be add-ons and additional content but the sheer amount of entertainment enjoyment — 50, 60 hours - is pretty difficult to provide through an Internet connection. So I believe that certainly in the near-term the current approach of packaged software with some additional online play that works from a community standpoint and a content creation standpoint is probably the model.

Now that Microsoft just cut prices on the Xbox, you are the only console maker to not cut prices. Will you?

The consumer is voting with their wallet and their pocketbooks that the Wii and the DS represent fantastic values. So far this year, month in and month out, the Wii and DS have been number one and number two selling systems for the month. That suggest our value equation is finely tuned at this point.

So no price cuts?

There is no need for price cuts on our systems today.

(Photo: Reuters)

When I was a kid, my mom would drop me off at the library so I could “study.” I would sneak to the basement of the library and play “Where in the World is Carmen Sandiego” on the library’s computer. It turns out I was studying, fooled into playing an educational video game.

Kids love video games, so why not make them fun and educational? That’s the idea behind a Seattle-based start-up, partially funded by Microsoft, called Sabi Inc., which is releasing a new game called “ItzaBitza.”

The reading and drawing game is targeted at children four years and older. It features a technology developed by Microsoft’s research division called “Living Ink,” which allows children to draw objects, such as a house or a tree, that come to life and interact with the game’s characters.

As part of the game, children embark on various “quests,” which force the players to read on-screen instructions. If a child gets stuck on a word, they can roll the mouse over the letters to pronounce the words out loud.

Sabi has a healthy level of appreciation for what it’s done:

“The same way Sesame Street was groundbreaking for TV, that’s how I would look at this,” said Co-Founder and Chief Executive Margaret Johnson, a former Microsoft employee. “It’s the time for an update to the get to the type of gaming that kids are doing today.”

The company recieves capital, support and intellectual property from Microsoft in exchange for a “meaningful” minority stake in Sabi. Microsoft and Johnson declined to comment on specifics.

The game is only available for PCs, but Sabi said it is looking to bring the game to other platforms. It’s available for $19.99 at www.itzabitza.com

(Photos: Sabi/ItzaBitza)