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Microsoft was pissed that Bungie wanted to announce its new project at E3

Today, as promised, I got more details on Bungie's fight with Microsoft that led to the Xbox 360 maker completely omitting new "Halo" projects from its Monday E3 press conference and the developer canceling its planned announcement of a new game on Wednesday. (If you want full background on the imbroglio combined with what I'm reporting now, read my story in today's Daily Variety)

What was the reason for all the fussing and the feuding? According to a source very close to one of the companies involved, Microsoft was seriously peeved that Bungie was making its own plans to announce its new game on Wednesday at E3.

Even though Bungie's now an independent company, Microsoft is still its publisher and apparently wants to be in charge of PR strategy, especially when it comes to major new game announcements. While that may not be the only cause of tension, I'm told it has been the major issue in the past week and is what precipitated Xbox head Don Mattrick's decision to omit all references to new "Halo" projects on Monday, even "Halo Wars" (which Bungie isn't even developing and is being shown at Microsoft's booth). And it's also, of course, the reason why Microsoft (the mysterious "publisher" in Bungie president Harold Ryan's Tuesday website posting) forced the developer to delay plans to announce its new game.

The view within Microsoft, however, is that Bungie made a premature promise to announce something new at E3 and is now trying to shift the blame.

Going forward, of course, this leaves both sides in an awkward position. Don Mattrick and Harold Ryan are not the best of buddies right now, to say the least.

But it seems like they have to work something out. Microsoft is still Bungie's publisher and owns a minority stake in the studio. And it would be a PR disaster of major proportions for Microsoft if it pissed off Bungie enough that the studio that created "Halo" stopped even consulting on future incarnations.

There has been lots of other relevant reporting on this topic elsewhere today. MTV Multi-player has Don Mattrick saying that Bungie is working on a new "Halo" game It's not clear exactly what that means (is it solely developing? Helping another developer?), but it's definitely my understanding that Bungie's plan on Wednesday was to announce an original project, not another "Halo" spin-off or sequel.

The L.A. Times quotes Don Mattrick saying that "Halo" was cut from the Monday presser simply due to time concerns. I think it's safe to say he's being less than totally forthright. It's possible, if doubtful, that Microsoft just couldn't fit a demo of "Halo Wars," one of its biggest first party titles coming out in the next year, in the 90 minute event.  But the fact that "Halo Wars" was never even mentioned, nor was the mysterious project Multi-Player reported, is conclusive proof in my mind that something else is going on.

The Times also quotes Mattrick comparing the absence of "Halo" to the absence of the "Grand Theft Auto IV" downloadable content from the press conference. But while neither got a demo, I have it here in my notes that some exec at the press conference specifically mentioned that the "GTA IV" episode is coming "later this year." That's more love than any new games with the word "Halo" in the title got.

Finally, the Times implied that Ryan's assertion that Bungie's publisher canceled the planned project announcement was referring to the absence of "Halo" from the Monday press conference. It is quite possible Microsoft was going to announce a new "Halo" game (that Bungie is perhaps working on, per Multi-Player) at Monday's press event and then pulled it.  But I know for a fact that Ryan was referring to an announcement planned for Wednesday and I'm pretty sure that it was non-"Halo."

What will the music industry think of Lips?

Today at E3 I got to demo Microsoft and iNiS' upcoming karaoke game "Lips" and got some more details on the innovative new feature that will let players import songs from their iPod (or Zune, as Microsoft keeps reminding us) into the game.

It turns out the game can handle any DRM-free music file, which is really impressive. iNiS' Chief Creative Officer Keiichi Yano also promised there will be a cool solution to the question of showing lyrics to the song on screen, though he didn't provide details. (I would imagine it's a deal with Gracenote or another online music database)

Being a business reporter as well as a videogame critic, my thoughts immediately went to the financial end of this -- if the game can import any MP3, that means Microsoft doesn't have to have a licensing arrangement with the song's label or publisher. Meaning Microsoft doesn't have to pay the people who made the music. Yano confirmed this for me.

Activision and MTV certainly pay labels and publishers for the songs in "Guitar Hero" and "Rock Band," as does for "Singstar." I would also imagine that Microsoft is paying the rights holders for all songs included on the "Lips" disc, as well as any downloadable content.

Microsoft has some good lawyers, so I'm sure they're comfortable with the idea that they can legally use any song that users already own (regardless of where they got it) in the game. But it's not clear to me that the music industry would be cool with this arrangement. On the contrary, in fact, labels are increasingly looking to videogame as a source of revenue growth. They expect to make money when their songs are used in games.

And on the face of it, it doesn't seem like there's a reason why the source of the music (my iPod vs the game disc) should effect who gets paid. Half the people who bought "Guitar Hero: Aerosmith" may already own lots of Aerosmith CDs, but that doesn't mean Activision got out of paying to use the songs. Making the song into a game is arguably a transformative use for commercial gain.

I'm not saying I think Microsoft should have to pay. But based on everything I know about the music industry, I would think they won't be pleased that "Lips" owners can use their songs in the game for free. This is definitely something I'll be looking into more.

Absence of Bungie and "Halo" from E3 was due to a last minute conflict with Microsoft

Many of you may have already seen the note on Bungie's website where President Harold Ryan said the newly independent development studio behind "Halo" had been planning to reveal "something exciting" it has been working on but that those plans "were just changed by our publisher."

Ryan didn't provide any more details, but I can shed a little light. The publisher in question is Microsoft. Bungie Studios has apparently had a conflict with Microsoft that let to the decision to excise any reference to new "Halo" products, even 2009's "Halo Wars"  or the mysterious Peter Jackson project, from Microsoft's press conference on Monday (an absence that surprised many gamers and observers). My understanding is that that call was made very recently, as in the past few days.

Separate from Microsoft's press conference, however, Bungie was planning to take the wraps off its first original, post-"Halo" project today (Wednesday). But the dispute with Microsoft apparently put the kibosh on those plans as well. That decision was made on Tuesday evening, just a few hours before Ryan posted his note.

This is all a bit hazy, of course. Assuming that Bungie's stake in any future "Halo" projects was clearly spelled out in the deal where it divested itself last year, what could the conflict have been that led to Microsoft choosing to not even discuss future plans for its top franchise? And given how massive the interest in anything new that Bungie is making would be, what kind of a fight could lead to those involved not wanting to announce it at E3?

I don't know the answers, at least not yet. But I'll keep reporting this in the days to come and will hopefully find out more. I should also note that I haven't yet reached anyone from Microsoft to comment and a spokesperson for Bungie didn't have anything to say.

1 vs. 100 launches Microsoft's new primetime game programming strategy

From the perspective of videogames meeting traditional entertainment, I think the most intriguing news from Microsoft today was its partnership with Endemol to make an interactive version of "1 vs. 100."

No, not the idea of turning a game show into a videogame. That's been done.

But what's really interesting is that Microsoft is "programming" primetime "1 vs. 100" events. It's essentially a massively multi-player casual game and it only happens at certain times. It's part of a new tab in the Xbox Live interface called "Xbox Primetime."

So at 8 PM on a Thursday, for instance, thousands of people sign on to play as the one, the 100 (though I imagine it's more than 100 online), or watch in the audience. Everyone is playing together. There's even a  host who will run the game and respond live to what's going on. I'd call it a massively multi-player casual game.

I spoke to Xbox Live head John Schappert about it and he threw out scenarios like an 8 PM game focused on sports trivia and then one at 9 focused on entertainment.

Microsoft hasn't yet announced a business model for "1 vs. 100," which launches this fall along with the update to Xbox Live. But Schappert definitely didn't dissuade the suggestion that it will be advertiser supported. Given that this is a programmed event, it seems like the best opportunity I've seen for free, advertiser-supported gaming.

I don't know what Endemol's deal is with Microsoft, but this is an obvious strategy for any media company with a property that has options for huge numbers of people to interact. A live interactive version of "1 vs. 100" is much, much more compelling than playing a disc-based game on your own with canned responses from the host.

I think what's most innovative about "1 vs. 100" is that it's PROGRAMMED. Consider the fact that as more and more people get DVRs and watch video online, TV is becoming increasingly less programmed. And here videogames are becoming MORE programmed. If you have a DVR, there's really no reason to watch TV at 8 PM, unless it's a live sporting event. But now, for the first time, there's a really good reason to play a videogame at 8PM.

"1 vs. 100" is part of an entire new section of Xbox Live called Xbox Primetime, so we can expect to see more games with live events like this. And having a captive audience at a certain time is a fantastic way for Microsoft to sell advertising on Xbox Live and rapidly grow that revenue stream.

Microsoft: 360 will beat PS3, $1 billion in online revenue

Microsoft unleashed a few new stats and predictions at its press conference today:

-Videogames head Don Mattrick confidently predicted that "Xbox 360 will sell more consoles worldwide this generation than Playstation 3." No mention of Nintendo, as the Wii is already surpassing the 360 despite launching a year later.

-Since the launch of the 360 in late 2006, Microsoft has made more than $1 billion in revenue from Xbox Live. That includes subscriptions for $5 per month / $50 per year as well as downloadable games and videos.

-Movies and TV shows account for more than 1/3 of paid downloads on Xbox Live in the U.S.

NBC U joines Xbox Live, Netflix finally happening, Live redesign

The list of studios and networks NOT on Xbox Live got even shorter today as NBC Universal has signed up to offers its tv shows. The only major studios not on there now are Twentieth Century Fox (though Fox TV shows are on there) and, for obvious reasons, Sony Pictures. And now every major television network is on Xbox Live.

Microsoft also today finally unveiled the partnership with Netflix that we all knew was coming. As expected, Netflix subscribers will be able to get movies available to "watch instantly" via the Internet on a PC on the Xbox 360. The one unexpected feature is that users can share the movie with friends so they can watch together. The friends do have to be Netflix subscribers, though, which isn't quite as cool as I had initially hoped.

It's all part of a huge redesign of Xbox Live that appears to make the service a bit easier and more intuitive to navigage, while also adding more features. Picture on right was borrowd from Kotaku, so thanks to them for managing to grab that.

It also integrates online avatars which can represents users in their profiles, in parties friends can form to play together and chat, and even in some new games (such as the previously mentioned "Scene It: Box Office Smash"). Color me a bit skeptical about these rip-offs of Nintendo's Mii's. Especially for the hard core fan base of the 360, which I'm guessing won't want to have a cartoon replica of themselves online.

But I asked Live head John Schappert about that over lunch with some Microsoft execs and he said there will be options that appeal to more core gamers, like the ability to dress up your avatar in the outfit of a game character like Master Chief, Dom from "Gears of War," etc. (Those are just examples, not promises).

Xbox 360's new games: South Park, Portal: Still Alive, Lips and more

The first news from today's Microsoft press conference at E3 is the new game announcements. More posts coming very (very) soon on the new features in Xbox Live, new video partners, and the long awaited Netflix partnership:

Since all of the biggest console titles ("Gears 2," "Fable 2," "Rock Band 2," "Resident Evil 5" <wow that's a lot of sequels>) have been previously reported, I thought the most exciting announcements were actually on the downloadable side, so let's start with the new titles for Xbox Live Arcade:

-A new "South Park" game. Literally no details besides an announcement that it's coming in 2009, but given how popular "South Park" episodes are on Xbox Live Video Marketplace and how often I hear random players on Xbox Live quoting episodes, this seems like almost a no brainer hit. Especially if they manage to capture teh show's humor at least as well as "The Simpsons Game" did.

-"Portal: Still Alive." A sequel to the best videogame of 2007 (I don't know if I've ever said that on this blog, but that's my call) coming later this year as a download. According to Glados, whose voice showed up at the press conference, there will be new levels and achievements. I do hope that in addition to new challenges, it will also expand the original game's awesome story.

-Sequels to "Geometry Wars" and "Galaga Legions," both coming this year as well.

And the new console games:

-"Lips." As I reported (with a lot of help from Kotaku) last week, there's a new music game exclusively for 360. It's a karaoke title made by "Elite Beat Agents" developers iNiS and lets players import music from an iPod or Zune into the game. Not sure exactly how that'll work, but if it can really make any song work, that'll be amazing. Or maybe it's only songs that have been pre-cleared for "Lips?"

-"You're in the Movies." Players use the Xbox Live camera to move around in mini-games where they do things like run, swat away bugs, dance, etc. Then the game puts those video clips in a trailer for a B movie with totally different context. The resulting videos can be shared online. Could be an amusing party game. Was certainly amusing to watch Microsoft execs like Don Mattrick and Shane Kim play.

-"Scene It: Box Office Smash." A new "Scene It" trivia game focused on movies that uses those little remotes that Microsoft introduced at E3 last year.

Microsoft to debut a new music game at E3

I don't really have any details at all, but I'm told by somebody involved in promoting it that Microsoft will be debuting "a brand new music/singing game." Given that "Rock Band 2" is an Xbox 360 exclusive (for a little while), I've got to imagine this is a much more casual title and not something that competes with "Guitar Hero" or "Rock Band' too directly.

Since I have so little info, this definitely falls into the "rumors" category, but it comes from a source who seems to know, so it's safe to say something is up with Microsoft and music next week.

Update: Kotaku links to my post and says the music/singing game in question is probably "Lips," from "Elite Beat Agents" developers iNiS. Given what a big fan I am of "Elite Beat" -- I've been playing it a lot recently after burning out on the lame and pointless "Guitar Hero: On Tour" -- that's pretty exciting. And a fun example of collaborative blog reporting. Go team geek journalists!

NPD April 2008: GTA IV huge (duh), Xbox 360 and PS3 lag (huh?)

No wonder Microsoft made a big deal yesterday of announcing that Xbox 360 is the first console to reach 10 million units in the U.S.

The folks there undoubtedly knew that today's NPD numbers would be pretty dismal. Not that they're any better for Sony. Neither console maker got any visible bump from the debut of "Grand Theft Auto IV" in April. Xbox 360 sales were down 28% from March to 188,000. PS3 sales fell 27% to 187,000.

Everyone expected that both console makers would benefit, of course. The theory is that lots of people haven't made the switch to PS3 or 360 yet, but would do so with a hugely popular game like "GTA IV" to motivate them. But while Rockstar sold 1.85 million units in the first five days on sale, almost everybody who bought one appears to already own a 360 or PS3.

By contrast, Wii sales were virtually flat at 714,000, as Nintendo moved from one big hit ("Super Smash Bros. Brawl") to another ("Mario Kart Wii"). Nothing can slow down that Wii mojo, it seems.

Of course it's possible that the early "GTA IV" buyers already have a 360 or PS3 but those who are buying it in May are more likely to be buying a console, but that's not what anybody expected. When "Halo 3" debuted in September with 12 days left on the NPD calendar, 360 sales nearly doubled from August.

It's bad news for Microsoft and Sony and calls into question whether they're already close to tapping out the audience of people willing to pay $350 or $400 for a console, no matter how good the games are.

Also worth noting are the videogames that launched in April and didn't even manage to sell the 141,000 units necessary to break into NPD's top 10. Those include THQ's ``Battle of the Bands,'' Midway's ``NBA Ballers: Chosen One,'' and D3's ``Dark Sector.''

I'll provide a link to my full Daily Variety story as soon as it's available (Hey, here it is!). Meanwhile, make what you will of the month's raw data:

Top 10 games                       Platform    Publisher    Units sold in April
1. Grand Theft Auto IV            360          Rockstar   1.85 million
2. Mario Kart Wii                    Wii          Nintendo   1.12 million
3. Grand Theft Auto IV            PS3         Rockstar    1 million
4. Wii Play                              Wii         Nintendo   360,000
5. Super Smash Bros. Brawl     Wii          Nintendo   326,000
6. Gran Turismo 5: Prologue    PS3         Sony          224,000
7. Pokemon Mystery Dungeon: DS           Nintendo    202,000
    Explorers of Darkness
8. Pokemon Mystery Dungeon: DS           Nintendo    202,000
    Explorers of Time
9. Guitar Hero III                    Wii         Activision   152,000
10. Call of Duty 4                    360         Activision   141,000

Hardware sales      April          Lifetime-to-date
Wii                        714,200       9.6 million
DS                         414,800       19.6 million
PSP                       192,700       11.4 million
Xbox 360               188,000       10.1 million
Playstation 3          187,100       4.3 M
Playstation 2          124,400      ?

                                 April 2008     Change from April 2007   Year-to-date     Change from 2007
Total Videogames        $1.23 B                  47%                         $5.47 B              31%
Hardware                    $426.2 M                26%                         $1.84 B              13%
Software                     $654.7 M                68%                         $2.88 B              46%
Accessories                 $154 M                   39%                         $750.6 M            29%                

(This post has been updated since I spent a little more time going through the data)

Stats worth pondering from Microsoft, Vivendi, Sony

-Sorry Microsoft, but announcing today that you are the first current-gen console to sell 10 million units in the U.S. isn't much to celebrate. As of March, Nintendo has sold 8.8 million Wii's. And it launched a whole year after you guys. Which means it's a safe bet Wii sales will surpass those of the 360 by later this year despite a one-year disadvantage.

As for Xbox Live global membership of over 12 million... that's impressive, but we have no idea how many of those are paying "gold" members who play online and how many are just "silver" members who ocassionally log onto download an XBLA title or something. So, while Microsoft is still obviously was ahead of its competition in online gaming, it's tough to know what to make of that stat.

-Want a reminder of why when Activision merges with Vivendi Games, the combined company is going to be called Activision Blizzard? And why every title from Sierra (let alone Vivendi Mobile and Sierra Online) has to justify its existence to Activision?

Vivendi just released its first quarter earnings (Variety story here), during which 87% of the total revenue for the game division came from Blizzard. And that's without any new releases. So it's basically just "Warcraft" subscriptions and new buyers.

-Despite significant Playtstation 3 growth, Sony is predicting reductions in its game division as the Playstation 2, eight years after it launched, finally fades into obscurity (Variety story on Sony earnings here). But after a fiscal year (ending March 31) in which Sony Computer Entertainment lost $1.2 billion (a $1 billion improvement over last fiscal year), profits will finally rise as software sales keep growing and the loss per-hardware units falls.

In other words, it'll probably be a while until SCE grows revenue again due to the decline of the PS2, but the PS3 is on the verge of no longer being a black hole for profits.

Thoughts from Microsoft's Shane Kim

I also got to sit down with Microsoft Game Studios' head Shane Kim at the press event yesterday. I was far from the only one, obviously (the man just sat in a corner doing marathon interviews), so I figured I'd only post highlights of his answers to my questions:

Me: Do you feel like everyone who's going to buy your biggest exclusive games this year, such as "Gears 2," probably already has an Xbox 360?

Shane Kim: Because "Gears 1" was so successful, the [hardware sales] experience with 'Gears 2' is going to be different, sure. But there are still a lot of people who haven't made the switch from the last generation and I think "Gears 2" could be part of a combination of factors that help them do it this year, just as "GTA IV" is already converting more people.

Me: Looking at the success of "GTA," do you think that means publishers like you no longer have to release your biggest titles in the fall all bunched together?

SK: It's a good question. I'd like to think so, but the physics of the industry are the physics. We still see 50% of sales in the fourth quarter and 25% in December. It takes something very special to success at other times.

So you've got a bunch of publishers who are risk-averse public companies who, because they're making good bets, are all going to be shooting for the same quarter when most games are sold. Then they end up  crowding each other out.

It's hard to see how you fix that unless a game is as special as "GTA" is for all sorts of reasons. I'd like to think that if "Halo" was cross-platform, it could give "GTA" a run for its money, of course.

Me: You're obviously excited about the exclusive "GTA IV" episodic content. Do you think it's special because it's "GTA," or could we see a lot more episodic add-ons to games?

SK: We're very excited about the potential for Xbox Live as we build it out, including the potential for episodic content. But you have to remember that "Halo" and "GTA" are so big that they can drive lots of downstream sales.

It doesn't matter how great your downloadable content is, you've got to have that base. W e have some smaller titles that have done great downloadable content and not sold a lot because there's just no base.

Me: When big titles like "GTA" put out downloadable content, does that steal gamers' time and money from other new releases?

SK: I don't think it's necessarily a zero-sum game, though I understand it's all the same entertainment dollars and time. In general, no matter what, I have a lot of faith in the power of great content.

One other element is that if you do a great job with add-on content, you can slow down used game sales. That's very important for our industry.

Xbox 360 '08 line-up impressions

Apologies for the delay in posting, but getting up to San Francisco, then back, then catching up on everything I missed isn't easy. I'm not really sure how journalists who spend so much time attending press events manage to get anything else done.

Anyway, as most of you probably know, Microsoft hosted the press in San Francisco to show off its Xbox 360 lineup for the rest of 2008. Of course, those who want the hottest release dates and screenshots probably found them somewhere else, but here's the things I found most interesting about the exclusive games I got to try:

-"Fable 2" is without a doubt the only game that had me really excited. I'm one of those people who considered the first "Fable" to be one of my most disappointing gaming experiences ever, so I'm skeptical. But Peter Molyneux is a very persuasive speaker and her certainly had me convinced that this game will actually achieve of what he said he wanted to do with the first one: create a world where decisions have long-ranging consequences on everything from the story to the character's look and abilities and relationships. All combined with an interface and controls that can reward hard-core players without alienating casuals.

Sure, we've heard it all before, but everything Mr. Molyneux showed certainly indicated that "Fable 2" can actually do it. I was particularly interested in his answer when somebody asked about the path of good/path of evil issue, which as we all know was binary to the point of absurdity in the first "Fable."In this one, he promises, he's not about being good or evil. It's about cruelty vs. kindness:

If you want to be a good guy, you'll have to sacrifice a lot... things like gold or experience. If you're evil, it's all about greed. It's not about killing people or making them suffer.

He gave an example: At one point, a shadow creature tells the player he has to either suffer himself or let a young girl suffer. In most games, like the old "Fable," of course you'd let yourself suffer. But in "Fable 2," if you take the punishment, you'll have scars that will make other people, including your girlfriend or wife, recoil in horror.

Of course, these things are easy to promise and it's all about execution. But Molyneux certainly had very specific ideas about how to implement his grandiose promises, which is a big and exciting step forward.

-"Gears of War 2" was... "Gears of War" with a few improvements. That's hardly a bad thing, since the first was such a solid action game. But I was literally left thinking about how the reticule is a little bigger and the enemies looked a little different, since the gameplay, visuals, interface, etc. were basically the same thing. CliffyB (who else?) promised co-op and multi-player would be bigger and better. But it's basically the same game. I'm sure it'll be fun, but as of yet it doesn't look like it's upping the ante the way, say, "Resistance 2" is.

CliffyB also promised the story will be more epic and more integral to the game this time. Hell, if I can even tell what the story is this time, I'll consider that a huge improvement.

Oh, and remember back in February when I reported that "Gears 2" would have chainsaw battles? Now it's confirmed as true.

-"Too Human" looked a lot like "Mass Effect," which to me is a huge turn-off, but it's probably not the kind of game you can figure out much about in 20 minutes of playing. I can say, however, that the lack of camera controls drove me insane right away. Though maybe it's something you can get used to.

-"Ninja Gaiden 2"? Ummm, I killed a lot of people, then I killed a lot more, then I got bored. I can't imagine doing that for 20 hours, but I'm probably just not the target audience. It looks gorgeous, though. And controls pretty smoothly.

"Viva Pinata: Trouble in Paradise" and "Banjo-Kazooie: Nuts & Bolts" are not games I feel like I actually understand how to play at all even after watching demos and sitting down to play them for about 20 minutes each.

Gears of War 2: Chainsaw Battles

I never thought I'd be posting the "Gears of War 2" trailer again so soon, but looks like I have to, since I learned something new and cool about the game.

Those of you who have watched it already know that about halfway through, the two overmuscled 'roid poppers on-screen put their chainsaw guns together and start pushing back and forth. I was talking to two people last night who are close enough to the development team at Epic to know and they confirmed for me that this will be a mechanic in the game: When somebody tries to chainsaw you, there will be a way to push back with your own chainsaw gun and potentially fend them off or, possibly, end up chopping them into a bloody pile of flesh chunks.

I can't imagine Jack Thompson will be thrilled, but I'm already psyched. Here's the trailer again for those who haven't seen it:

GDC: Microsoft democratizes game distribution

Microsoft's unveiling today (as I predicted) of an open distribution service on Xbox Live for videogames created by amateurs with its XNA development tools is a big deal, if it works. The YouTube-ization of games, which started with modders in the '90s and gained a lot of momentum last year with the level creation and sharing tools in "Halo 3,' is an amazing phenomenom, since game development is an even more technically difficult tool for most people to master than filmmaking.

I have no doubt this could result in a flouring of videogame creativity, but I wonder what it will do for the types of games we get and how accessible they are. In a follow-up interview we did, Microsoft's Chris Satchell told me that numerous people using XNA have made titles that could appeal to women or kids. But it seemed instructive to me that the winner of Microsoft's first content for XNA users was a brutal slice-and-shoot actioner called "DishWasher: Dead Samurai." (pictured at right) It's exactly the kind of game that one hard core gamer makes for another.

XNA is easy to use compared to traditional development of AAA titles, but it's still not that easy. Certainly not as easy as, say, "LittleBigPlanet" looks to be (though that's only level creation, not game creation). That makes me worry a bit that the new Microsoft service will be mostly filled with games by and for hard core gamers. Not that there's anything wrong with that, but it doesn't exactly fulfill the promise of the democratization of videogames.

For those who didn't read the story in today's Daily Variety, here are the relevant parts about Microsoft's news:

Wednesday at GDC also saw Microsoft unveil a YouTube-like distribution system for independently created games. In a keynote address, execs said the service will allow anyone who uses the company's XNA toolkit, which enables amateur designers to make casual games, to offer their finished product to Xbox 360 owners via digital download. Service will start beta testing in the spring.

"We already have had lots of games made with XNA, but nothing to do with them," Chris Satchell, general manager of Microsoft's developer group, said in an interview. "This is the democratization of game distribution."

Company hasn't finalized plans for pricing. It's not clear whether all games on the service will be free or if designers will be able to charge for their work.

A suite of social media tools enabling users to share and rate games is expected. Microsoft will have active designers participate in a peer review process to ensure that submitted titles don't have pirated or obscene content.

If successful, the service could let amateur game designers showcase their work and launch their careers online, just as many filmmakers are now doing.

"This is a great way to give designers exposure and help them be identified by publishers," Satchell noted.

Online sharing of films of gameplay made in "Halo 3" is already extremely popular. Microsoft said in the keynote that approximately 100,000 videos from the game are being posted online each day -- about 30% more than the average for all of YouTube.

Later this year, Sony is releasing PlayStation 3 title "LittleBigPlanet," which will let users create their own levels. Microsoft's new service is the first to distribute amateur games onto consoles, however.

Microsoft also said XNA designers will be able, for the first time, to make their games for the company's Zune portable music and video player. It's the first sign that Microsoft is planning to make the struggling Zune brand its portable gaming solution. Device is more powerful than most cell phones, though not on a par with Sony's PSP or Nintendo's DS. It's not yet clear how Microsoft plans to distribute games for the Zune.

GDC: Is Zune Microsoft's handheld gaming solution?

Amidst the hoopla about Microsoft's new distribution system for user generated games unveiled today at GDC, the tech giant also dropped the news  that titles developed with its XNA toolkit will be able to work (when properly downscaled) on a Zune.

(For an idea of how it'll work, just imagine a "games" button in the menu on the screens above.)

This is particularly intriguing, and got kind of short shrift amongst the other news today. But given that Microsoft is the only console manufacturer without a handheld device, I think it's particularly interesting. For now, Zune is Microsoft's answer in handheld gaming.

It's a fascinating strategy, since a Zune isn't nearly as powerful as a PSP or even a DS. On the other hand, it's has more processing power than most any cellphone in the U.S. This afternoon I got to try out an XNA-created space shooting game on a Zune and it was pretty damned good The graphics were fantastic, the controls on the touch-sensitive pad were great, and it worked fine. Of course the graphics for any XNA-created game won't be nearly as good on Zune as on an Xbox 360. But they idea that some 360 games would even work on a Zune is impressive.

Of course the real question is whether the ability to play videogames will motivate anyone to actually buy a Zune.

Ironically, when Microsoft's John Schappert started building the excitement for gaming on Zune and listing the device's featured -- "What if you had a device with a big screen, a touch pad, a hard drive, flash memory, a hard drive," etc. -- it never occurred to me that he was talking about Zune. My thought was, "Microsoft's going to make games for the iPhone? How crazy!"

GDC: Gears of War 2 Announced... OHMIGOD!!!!

Microsoft officially announced "Gears of War 2" will be coming in November at GDC today. Anyone who has been reading my blog knows how I feel about that.

Nonetheless, it's interesting how GDC has really become E3 for the first half of the year. Just as it uses E3 in the summer to hype its holiday releases and announce some games coming in the next year, Microsoft today used GDC to hype major Xbox 360 releases for the first half of the year like "Grand Theft Auto IV," "Ninja Gaiden 2" and "Fable 2," while announced "Gears 2" for the holidays. Several other publishers are showing off their big releases for the spring and summer as well (and I'll be writing about more of them in the next day or two).

I don't want to sound like a "Gears of War" hater, however. I'm just not that thrilled at the announcement of a game that any journalist who can do a basic amount of reporting knew was coming. But I played a lot of the original "Gears" and expect I'll play plenty of the sequel. Especially online. For those who feel the same way, enjoy the trailer for "Gears of War 2." Warning, you may think you're seeing a trailer for "Sin City," but with giant chainsaw guns:

Blu-ray's victory and the Playstation 3

There have been many skeptics, myself included about Sony's decision to make every Playstation 3 a Blu-ray player. That added significantly to the console's production cost and it's disastrous $600 launch price, a major factor in stalled sales for the first year. And there wasn't much advantage on the game side. Despite Sony's claims, I haven't seen evidence that the higher data capacity of Blu-ray discs translated into better looking or playing games.

But today it's official: Blu-ray has vanquished HD DVD in the hi-def format war. Which means the now $400 Playstation 3 is one of the cheapest players for the only way to play hi-def DVDs. Combine that with a decent and growing slate of games and you've got a good value. Indeed, if you want to watch hi def movies at home, it's hard to imagine now why you wouldn't get a Playstation 3, unless the cost of stand-alone players starts  dropping or you just don't want videogames in your house. It's certainly already become a topic of conversation for my non-PS3-owning friends and is making me think it may finally be time to get one myself.

The question for Sony is how do they market it? Execs have made clear that their short-term goal is to establish the PS3 as a successful videogame console, something they didn't accomplish in its first year. Adding its capabilities as a Blu-ray player certainly muddles the marketing message and makes Sony Computer Entertainment look like they don't have confidence in it as a console.

On the other hand, Blu-ray is heading into the rest of 2008 with significant momentum and SCE would be crazy not to try and take advantage. It will be very interesting to see how Kaz Hirai and company try to cash in on that while still doing the work they need to do on the videogame front. It's a tricky balance.

As for Microsoft, now that it will be dropping its HD DVD add-on player for the Xbox 360 and writing off the millions it wasted supporting HD DVD, it has two options to mull:

-Start selling a Blu-ray add-on and pay a licensing fee to its biggest competitor for every unit sold

-Give up on hi-def DVDs and focus exlclusively on hi-def downloads through Xbox Live

Microsoft joins the HD DVD slash-and-burn strategy

Since Warner Bros. made the switch to Blu-ray at the Consumer Electronics Show, Toshiba has responded by slashing prices on HD DVD players. Though only two studios release movies in the format now, Toshiba seems to be banking on consumers buying HD DVD players just because they're cheaper, denying Blu-ray the dominance in player sales it expects to follow from a larger supply of content.

With Blu-ray taking a commanding lead, many suspected that Microsoft, a longtime HD DVD supporter because its software is used in the format's interactive applications, would jump ship. But not yet. Today the tech giant followed Toshiba's lead (perhaps helped by a subsidy from Toshiba?) and slashed the price of the HD DVD drive that can be connected to the Xbox 360 from $180 to $130. And Amazon.com is offering it for the super cheap price of $80. (hat tip: cheapassgamer)

Of course, for potential buyers who want a videogame console and hi-def player, $400 for a PS3 with Blu-ray is still cheaper than $350 for an Xbox 360 plus $80 -$130 for the HD DVD drive. But given the 360's other advantages (more and better games, superior online), not to mention its higher install base, that's still serious competition. Despite what we all thought at CES, I wouldn't look for the hi-def DVD war to end all too soon.

Gears of War 2... Who cares if it has been "announced?"

It's time for the video game industry to get over its obsession with titles being officially "announced."

Let's get real. Barring global catastrophe, there is going to be a "Gears of War 2." I know people who have seen levels being built for the game. People who work at Microsoft have casually referred to a "Gears" sequel in conversations with me as if it's obvious and not a big deal. But of course we all know it's coming. What are the odds that a multi-million selling action title published by a console manufacturer as an exclusive wouldn't get a sequel? About the same as Mike Gravel sweeping the primary elections today.

Nonetheless, videogame websites and blogs are abuzz today because the latest issue of GamePro teases a "Gears of War 2" story on the cover. "'Gears of War 2' officially confirmed?" is the urgent question in GameSpot's "rumor patrol." Then everyone followed up with "breaking news" follow-ups like this one on GamesIndustry: "Gears of War 2 announcement "complete nonsense.'"

Treating an official announcement as "news" is just another way that the gaming press allows publishers and publicists to control them. Imagine if political reporters refused to say last year that any of the candidates were running until they made their official announcement speech? Or if TV reporters treated it as a big deal when ABC announces that "Grey's Anatomy" will be back next fall. It's ridiculous, so why do we tolerate it in the videogame world?

The working assumption in every story should be that "Gears of War 2" is in the works. It's a fact and should be reported as such. If and when Epic/Microsoft shares details about the game, then sure, that's interesting. And maybe that'll happen as soon as GDC in two weeks. But someone official saying the game is coming, or saying they haven't made any announcements yet, is not news. If game journalists and players want to incentivize publishers to stop treating us like idiots, we should completely ignore the existence or non-existence of an "announcement."

(Oh, and if you're wondering when "Gears 2" will come out, consider this fact: When New Line got the rights to make "Gears of War" movie, producers said they are aiming for a summer 2009 release. Who knows if that will happen given the writers' strike and other development issues, but my guess is they'd love to come out the same year as the game sequel.)