Watch Microsoft’s Robbie Bach getting out of breath playing a wall-demolition game using Xbox’s new Natal technology, which works entirely on body gestures rather than a hand-held controller. (Click on the video and scroll onto 23:30)

Bach, head of entertainment and devices, demoed the new system at Microsoft’s annual financial analyst meeting in Redmond, Washington. There is still no date set for its commercial release.

The company hopes the new technology will vault it past Nintendo’s all-conquering Wii and rival Sony’s PlayStation.

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)

Microsoft's videogame chief Shane Kim came by our New York office this morning for the Reuters Media Summit and shared his thoughts on XBox 360 sales ("cautiously optimistic") and the outlook for the gaming industry amid the economic doom-and-gloom ("Who knows, maybe flat performance will be considered a remarkable achievement").

He also gazed into his crystal ball and served up some insights on the trends shaping the gaming business.

Consolidation is going to continue, he thinks, especially among the smaller videogame publishers as they search for hit games while keeping costs in check.

"There are a number of mid-tier publishers behind the Electronic Arts and Ubisofts and Activisions of the world who are struggling."

Another exciting trend for Kim is the return to videogame content developed by small creative teams, which he thinks could reduce the industry's dependence on sequels of hit games.

"That would be a good thing... because one of the challenges the industry has had, in my opinion, over the last five to 10 years is a growing reliance on sequels and licensed properties as opposed to those new creative hits. If we can find those nuggets that start smaller and can grow into big hits, that's a great thing."

He did wonder how smaller creative shops could find funding for their pitches, given that dollars could be hard to come by these days. But at the same time, it's an opportunity for bigger publishers, he said, since nothing rocks the gaming world like a hit game.

(Photo: Reuters)

Gaming insiders who have given consoles the death sentence, get a life!

Shane Kim, VP of Strategy and Business Development at Microsoft Corp’s Interactive Entertainment Business, said it’s too soon to write off the Xbox.

“This console generation will have a long life cycle. I think it’s way premature to say there will never be another Xbox,” said Kim at the Reuters Media Summit.

Industry veterans like WildTangent Chairman Alex St. John and Sandy Duncan, who set up and ran the European Xbox business for Microsoft, believe that consoles as we know them are doomed. Duncan said they will “die out ” in the next five to 10 years, according to an interview published in www.Thatvideogameblog.com.

Such forecasts are based on views that gaming consoles will be rendered obsolete by the increasing convergence of devices such as set top boxes and the fact that gamers will increasingly turn to the Web for new cool applications.

Kim admitted there was a lot of room for expansion via the Web.

“What’s interesting to think about will be what will define the next generation. It is absolutely a possibility where the next generation is defined by what we can do online rather than the hardware,” he said.
“We can reinvent the experience with the magic of software,” he said.

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)

    The rise of casual video gaming may have grabbed the headlines over the past couple of years, but the more hardcore end of the market dominated at Europe’s biggest gaming convention in Leipzig last week.
    Apart from new iterations of popular karaoke-style games such as Activision’s Guitar Hero, Electronic Arts‘ RockBand and Sony’s SingStar, which arguably kick-started the trend of easy-to-play casual fare, the world’s biggest games publishers focused on products for their core audience.
    Upcoming release Command and Conquer Red Alert 3 was a case in point. Not only does the game involve sending dozens of types of futuristic military unit across apocalyptic landscapes, but EA was marketing it in part on the basis that one of the
actresses in it, Jenny McCarthy, is a former Playboy playmate of the year.
    Most publishers were playing it safe, focusing on sequels such as a new version of The Sims – the virtual doll’s house franchise which has sold over 100 million copies since launch in 200? — or movie tie-ins such as a game based on new James Bond film Quantum of Solace.
    True innovation was thin on the ground, at least on a whistle-stop tour view of the main publishers’ offerings. Ubisoft demoed a game in the same genre as Command and Conquer which could be fully voice-controlled — apparently a first for consoles — while Sony previewed LittleBigPlanet. This marries the hot theme of user-designed content (think YouTube or MySpace) to an age-old platforming mechanic, the basics of which that would be familiar to anyone who had played Nintendo’s Mario games.
    Cute sack-doll characters jump over flames and on to rising platforms, but the novelty is that most of the game, from the characters’ outfits and personalities to the landscapes over which they clamber can be modified by players and shared online.
    But for two of the other most hotly awaited games of the season, there was no news, albeit for opposite reasons. EA’s Spore, in which players guide a lifeform in the Darwinian struggle from primaeval soup to interplanetary conflict, is due out on Sept. 4 and had already been presented in near-final form at other events, so did not get a spot in EA’s main presentation.
    World of Warcraft: Wrath of the Lich King, the next installment of the online role-playing game that has over 10 million subscribers — was available to play in an early form, but it remained unclear when the final version would be on sale. A spokesman for Activision unit Blizzard could not even confirm it would definitely be out before Christmas.

    * Where do you think gaming is going in the run-up to this year’s holiday season? Were you at the Leipzig Games Convention? Tell us what you think below.

Google and Viacom reached a late night accord on safeguarding the anonymity of Google YouTube viewers. Google will no longer have to hand over the user names and IP addresses of its viewers.

But what of the scuffle around the viewership data of Google and YouTube’s own employees? CNET’s Greg Sandoval reported last week the negotiations stalled on Google’s unwillingness to turn over information on its own employees, citing unnamed sources.

In other words, how would Viacom’s $1 billion copyright infringement suit against Google turn out if the data showed YouTube co-founder Chad Hurley viewing and uploading “Colbert Report” videos?

No word on this yet.

(Reuters)

Keep an eye on:

• Microsoft says the Xbox 360 will outsell Sony’s PS3 over the lifetime of the consoles. (Reuters)
• Provigil: the drug of choice for Silicon Valley entrepreneurs. (TechCrunch)
• Carl Icahn to Yahoo’s Jerry Yang: “‘I like you, but I have to get rid of you.” (NYTimes)
• AOL launches personal finance site Walletpop. (Reuters)
• Netflix subscribers can soon watch streamed movies over the Xbox 360. (Reuters)

(Photo: Reuters / Andrew Winning / Protesters take part in an Amnesty International demonstration in Belfast (2008))

If imitation is the sincerest form of flattery, then Nintendo should feel very flattered by Microsoft’s press conference that kicked off today’s E3 Media & Business Summit in Los Angeles. 

Our video games reporter Kemp Powers points out similarities. 

One of the major announcements at the press conference was a planned overhaul of the Xbox 360 console interface. The new suite of features will include a community games channel to showcase (Warning: media buzzword) user-generated titles.

More interestingly, Microsoft heavily plugged the addition of cartoon-like personalized avatars that can be inserted into a number of upcoming casual and family game titles.

Yes, just like the Mii, the customized cartoon avatars that can be found on Nintendo’s popular Wii console. The avatars on the Xbox 360 will have a deeper level of customization than Nintendo’s Miis, and users will be able to select from a wide variety of clothes, accessories and hairstyles, Microsoft said.

Microsoft also unveiled a number of casual and family games to capitalize on the popularity of the Wii, such as “Lips,” a karaoke-style music game that employs a motion-sensitive wireless microphone.

Motion sensitivity. Cartoon avatars. Peripherals and accessories. Games for the entire family. Sound familiar? It’s Nintendo’s playbook, but hey if you can’t beat them….

(Photo: Microsoft)

Who’s going to run Yahoo?

There are myriad answers to that question, but AllThingsD suggests that Ross Levinsohn, the former head of News Corp’s Fox Interactive Media Group, and partner, former AOL Chief Jon Miller, are heavily mentioned as the kind who might get a crack at it.

Miller’s an interesting choice and one wonders if joining the company would push Yahoo closer to an AOL deal. Miller wasn’t immediately reachable on Monday night.

Meanwhile there’s no guarantee that Jerry Yang, who is still in charge, is going anywhere. In fact, on Monday, Yahoo itself worked to rally shareholder support in the face of a proxy battle with Carl Icahn, saying the his plan for the company’s future was “ill-defined”, and questioned whether Microsoft was ever serious about a full-scale merger.

Yahoo annual shareholder meeting in Silicon Valley on Aug. 1 — where Icahn is running a slate of directors to replace Yahoo’s board and remove Yang — promises fireworks.

(Reuters)

Keep an eye on:

* Microsoft plans to cut the price of its best-selling Xbox 360 Pro model by $50, to $299 in the next few weeks. (Reuters )

* Nokia signed a deal with Warner Music Group to make Warner titles available through its “Comes With Music” service and Nokia music store. (Reuters )

* The sequel to last year’s best-selling predecessor “Rock Band” will be released for the Xbox in September, months ahead of key rival “Guitar Hero.” (Reuters )

(Photo: Reuters)