Microsoft is hoping to set the stage for E3 by hosting the first press conference of the show, and while the company kept the majority of its presentation dedicated to games, it's clear that Microsoft wants to turn your 360 into a full-fledged entertainment hub. Last.fm is coming to your console, free with your Gold Xbox Live Subscription. The console's video service is being relaunched as Zune Video, and it will feature 1080p content that you don't have to load—you just choose your video and watch. Facebook is coming to the service, with integration for your Xbox Live avatar and even some games, such as the upcoming Tiger Woods. Twitter is also heading to Xbox Live. The motion-sensing camera, called Natal, is real, and Microsoft showed off how it is used to control the UI for the system, explaining that now anyone can play a game. Welcome to the social.

The motion-camera, which in fact does look functionally identical to the 3DV demo we previously wrote about, allows you to control games, try on virtual clothes using your own image, and even use hand-motions to buzz in while playing game shows. Voice commands? They'll be in there. Microsoft brought Steven Spielberg onto the stage to demo the technology, and his avatar moved in real time as he controled the UI. While many called this technology a gimmick before E3, everyone seems completely impressed by what's being shown here today. This isn't waving your hands around like the Wii, this is a very immersive technology tied to a very powerful console. The game demos look promising, including the ability to simply paint on a virtual canvas with your hands and voice commands. The sense of play is very Nintendo, and that's a high compliment for Microsoft.

In a slightly creepy twist, you'll no longer have to sign into your Live account; the system will know who is playing it by your face. Peter Molyneux showed off a game called Milo, where an animated character talks to you and you can talk back. Water shows your own reflection. You can draw a picture and show it to the television, "giving it" to a character who then interacts with the image. The level of interaction looks amazing.

The show also hyped a number of games, including The Beatles: Rock Band, which confirmed three-part harmonies and the ability to download entire albums as DLC. The songs "I Saw Her Standing There," "I Wanna Hold Your Hand," "I Feel Fine," "Day Tripper," "Tax Man," "I am the Walrus," "Back in the USSR," "Octopus's Garden," "Here Comes the Sun," and "Get Back" are all confirmed. In a heart-warming twist, "All You Need is Love" will only be available via Xbox Live, and the proceeds from the song's sales will go to Doctors without Borders. All the hate from Sony fans will go directly to the comments.

Paul McCartney and Ringo Starr of course made a quick appearance, collected their paychecks, waved, and away they went. The star factor at this event is amazingly high.

Next up? Tony Hawk... well, hawked the new Tony Hawk: Ride, saying that it's going to feel just like riding a real skateboard; something that is sure to enrage the "why don't you just play a real guitar" set that's so vocal online. Until we have a chance to play for ourselves—and that's coming—it's easy to be skeptical about the board hardware that will come with the game. Modern Warfare 2 of course looks great and intense, as does Final Fantasy XIII, but that has as much to do with the sound system and theater as it does the games. We do know two maps for Modern Warfare 2 will hit Xbox Live first, as it seems like Microsoft getting the checkbook out was a theme of today's briefing.

Shadow Complex, an action/exploration title from Epic that's reminiscent of Metroid and Castlevania, was also shown, as was a cartoony racer called JoyRide. After that, the crowd finally got what it had been waiting for: the first details of Crackdown 2. Dead Rising 2 is exclusive to Xbox 360 and PC. Left 4 Dead 2 is likewise coming to Xbox 360 and PC. Splinter Cell Conviction? Yeah, that's exclusive to the 360, and it looks like it will feature some terrifically brutal context-sensitive kills. Forza 3 is coming in October, and if nothing else it looks like a car title that you'll want to play from the cockpit view; it's a stunning-looking game. Turn 10 makes some bold claims, as they talk about wanting to "win" the racing genre. They're clearly gunning for Gran Turismo 5 with this presentation, and the team unveiled an impressive high-definition video editor to show off your exploits on Xbox Live.

This was also the first time that footage from Halo: ODST had been shown, and it looks like the story will be told through the eyes of multiple soldiers, which seems like a smart bet. You'll be able to play the standalone expansion on September 22. That's not the end of Halo, as Halo Reach is coming in fall 2010. Of course, if you buy ODST you'll get an invite to the Halo Reach beta.

Alan Wake was shown in detail, and it looks absolutely amazing, with a heavy emphasis on using light to stay safe in the game. While sequels and more Halo may be exciting, this is what people came here for: to be turned-on by something that feels new. The game is coming in spring 2010, and is also exclusive to the Xbox 360.

While not an exclusive, Hideo Kojima revealed that Metal Gear Solid Rising is coming to the Xbox 360. This is Microsoft chipping away at the empire that was Sony, bringing yet another title that used to be known only on PlayStation platforms to the Xbox.

The conclusion? Microsoft has set the bar amazingly high for everyone else. Natal looks incredible, although it will take some real-world experience before we can completely believe the claims made by the presentation. The number of exclusives and well-loved properties is likewise impressive, although gamers are already voicing their anger at a sequel to Left 4 Dead being released so soon after the first game. In one swoop, however, Microsoft has revealed exciting exclusives, hyped games with exclusive or timed content on its system, given Xbox Live new life, and has perhaps even put the Wii on the technological defensive. That's from a stage show, however, and the question remains: how much of this will feel this real—and this good—once we get our hands on it?