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Microsoft Kicks Off E3 With Xbox As Entertainment "Hub"

CNBC.com

It's that time again: the Electronics Entertainment Expohere in Los Angeles, at the LA Convention Center. Still a far more subdued expo than its heyday years, but bigger than last year's airplane hangar event in nearby Santa Monica.

As in year's past, Microsoft kicked things off with its Xbox 360 love-in, but unlike prior years, the company has a pretty compelling story to tell. Last year, Halo 3 dominated everything. This year, it's about the platform: Xbox as entertainment hub.

Microsoft's Don Mattrick sang the praises of the console, declaring emphatically this morning that Xbox will indeed outsell Sony'sPlayStation 3 for this generation of devices. A bold statement, to be sure, but a declaration nonetheless. He says that Xbox 360 is already the top console sold in the US, way ahead of both PS3 and Nintendo's Wii, already outselling PS3 by 5 million units in the US. Sales trends, he says, will continue.

But Xbox is more than merely a revenue--and now profit--generator for Microsoft. Third party software developers are also riding the 360 gravy train, enjoying $2.2 billion in revenue from their Xbox titles, or twice what they're seeing from PS3, and way ahead of the $900 million seen from Wii titles.

Xbox Live is also humming along: last year at this time, 6 million registered users. This year, 12 million. And they're spending: already $1 billion in downloads, including games, movies and TV shows. A half-billion downloads so far from a library of 10,000 movies and TV shows. Xbox, says Mattrick, is now the world's top purveyor of on-demand, HD movies and TV programs, announcing a new partnership with GE's NBCUniversal, the parent of CNBC.

At the same time, Microsoft also confirmed the longstanding rumors of a content sharing alliance with Netflix, and will be the exclusive game console partner for the online movie download/delivery service. This has enormous potential for Netflix, mostly because of the giant audience the Netflix service will now see.

Guitar Hero got some attention. Kai Huang of Red Octane pointed to boon this game has been, especially for Xbox. Music sales have soared, turning Xbox into the by-far leader of console music downloads. When Guitar Hero World Tour launches, R.E.M and Metallica will both partner with the game, offering exclusive download content for Xbox 360 users. Duffy sang her hit "Mercy" as well, and we learned that mega-hit Rock Band II from Harmonix and MTV will debut exclusively for Xbox 360 this September, with Bob Dylan licensing a song for the first time for a game, and AC/DC will provide a track as well. Again, major news for Xbox.

All good for Microsoft. So far. We'll be covering all this tomorrow, including exclusive comments from Microsoft's Mattrick,Sony's CEO Jack Tretton, Alex Rigopolus from Harmonix, and others.

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