E3: Microsoft Comes Out Swinging with 'Project Natal'

Microsoft is broadening the home entertainment aspects of the Xbox 360, while it tries to one-up Nintendo's Wii.

The company on Monday debuted a number of new partnerships and gave the world its first look at Project Natal, a new motion-sensing camera that allows players to control on screen action without any handheld controller. Microsoft gave no hints, however, as to when it would be released.

The Natal announcement was one of a series of reveals the company made at its E3 media presentation—a rollicking affair that kicked off with Paul McCartney, Ringo Starr, Yoko Ono Lennon and Olivia Harrison reuniting on stage promote the upcoming game “The Beatles: Rock Band.”

“The game is good. The graphics are very good. And we were great!” joked Starr.

“Who would have ever thought we’d end up as androids?” added McCartney.

The company also unveiled a partnership with popular social media sites Facebook and Twitter, a new alliance with last.fm that will bring streaming music to the system and the first peak at a previously unannounced “Halo” game.

It was Natal that industry observers were most curious about, however. Microsoft says the system will have full body motion capture (meaning any movement players make will be reflected on screen).

Natal will also recognize users' voices, allowing them to talk with onscreen characters or answer questions in a trivia game vocally, instead of making a multiple choice selection.

“The controller will continue to evolve, but here’s the problem: For far too many people, the controller is a barrier, separating video game players from everyone else,” said Don Mattrick, corporate vice president at Microsoft. “We asked ourselves: Can we go beyond the controller? Can we make you the controller?”

Navigating the Xbox Live dashboard using Natal involves swipes of users' hands, much like Tom Cruise did in the film “Minority Report”. The company had live demonstrations of several tech demos, including one where users painted using hand motion and another involving breaking a brick wall with throws and kicks.

Another demo, shown on video, but not live, showed a realistic-looking boy who spoke and played with the player.

© 2009 CNBC.com