Painfully, the ad makes it look like the God of Collection is two separate games. A quick comparison of Black Friday console deals from the big guys:

Walmart
• Playstation 3 Console w/Infamous & Batman Arkham Asylum Games + Dark Knight Blu-ray – $300

Best Buy
• Sony PlayStation 3 Package w/120GB Console, Little Big Planet, and Ratchet and Clank – $300
• Xbox 360 Elite 120GB with Pure and Lego Batman + four games: Sonic the Hedgehog, Spider-Man Web of Shadows, Wall-E, and Ghost Recon 2 – $300

So if you're after an Xbox 360 Elite, then Best Buy seems to be the clear winner so far, while for me, Walmart's PS3 deal looks like the pick of the crop. GameStop does have a bunch of cheap games, though. Check out the listing at: [Kotaku]

Predicted by Ars, the Xbox 360 Elite Holiday Bundle includes a 360 Elite, Lego Batman: The Videogame and Pure. It's available now for $299.

Meanwhile, for those just looking to score a controller and some games, the $60 Xbox 360 Wireless Controller Game Pack includes a wireless black controller and Geometry Wars: Retro Evolved 2, Lumines LIVE!, Bomberman LIVE! and Ms Pac-Man. We're feeling too lazy to look up the price of each title and convert from MS points, but given that a controller only runs about $35, this bundle sounds like a bit of an upsell if you're not going to play each and every title. Also, Jason Chen will just top your Geometry Wars scores, so don't even bother. [Major Nelson]

Yes, Blu-ray is a big aspect of what makes the PS3 appealing. But for gamers, is that a huge selling point? As for Wi-Fi, well, that depends on your setup. Most gamers who are serious about playing online probably would rather plug their console right into their router. And Bluetooth? Who gives a shit about Bluetooth?

To be fair, there are definite advantages to PS3 that make it appear to be a better value. Really want a Blu-ray player? Home theater setup too far away from your router to plug the console right in? Turned off by an annual charge for online services? The PS3 is right up your alley.

But for many people who are interested in serious gaming consoles, what matters most is software, not hardware. And the Xbox 360 arguably has the best games library and the best online service. And for me at least, that makes up for Bluetooth and Wi-Fi about 50 times over, which is why I would personally recommend the Xbox 360 to a friend over the PS3. But despite that fact, the decision as to what console to buy has never been harder.

Aw, what the hell. Just buy both. [Kotaku]

It's all been rumored for a while, but seeing those numbers captured with some sort of sub-cellphone-quality camera really makes the price reduction hit home. (Plus, the extra controller Target's offering is a pretty tempting cherry on top.)

This is happening, folks. And the feeling is more intense than I'd ever imagined. [Engadget]

UPDATE: Kotaku has just published a similar ad from Best Buy. At this point, we don't even need Microsoft to confirm. I mean, they can or whatever. But we already know what's up.

This September, the Xbox 360 Pro (60GB, $299) will be replaced by the Elite (120GB, $399). So in one sense, the Xbox will see a price cut. In another, the 360 doesn't necessarily sound like it's getting any cheaper with some lower entry level price.

Also of note, Ars reaffirmed their claim that a PS3 Slim would arrive this fall along with price drops "on the hardware that's out now." Even with these rumors standing as they are, Sony cuts the price of the PS3, it's hard to imagine Microsoft not offering a true price cut as well. [Ars Technica]

It's free for a limited time, since Microsoft didn't really target Elite at upgraders, but didn't want to piss them off either. Grab one and transfer your stuff already. – Jason Chen

Update: There's some confusion as to what the transfer process does. If you don't use this cable to transfer, yes you lose your downloaded game videos which you can download again, but you also lose access to your Arcade games, which end up as demos if you try and download them again.

Also, it doesn't render the 20GB one useless. It just wipes out the old data on there. You can still use it as a spare drive.

Migration Help [Xbox via Kotaku]

So for you guys who made a little wish to your fairy godmother that the Xbox 360 Elite was going to have cooler parts, you may want to wait until fall. And for those of you who already purchased an Elite? We're sorry. – Jason Chen

Xbox 360 GPU to go to 65nm in fall, TSMC to see side benefits, says paper [Digitimes]

Product Page [EBGames]

Don't let the black paint job distract you; the only thing you need to ask is if it improves the video quality. After seven hours of testing, with standard definition DVDs, HD DVDs, benchmark discs, WMV movies from Marketplace, games, and even photos, I have my verdict:

The XBox Elite's HDMI output is the best around for all the formats I mentioned above.

Should you buy it?

Gamers who have an Xbox 360? No!

Videophiles looking for an HD DVD player? No!

Videophiles looking to get into the Xbox Live video marketplace? Yes, but know that this bitch is still loud.

Guys like me who are gamers and video geeks? Ya, this is for you. The fact that all that video and audio is being piped through a single HDMI cable is a bonus. And this is confirmed by only one other Xbox Elite owner, but I swear it's a touch cooler and quieter, but those differences could come from the old unit's worn fan bearings, and dust on heatsinks causing undue heat retention. It's a wash.

It's kind of technical, but if you really want to know why the HDMI is better, read on.

Let's start with video. Playing back the Xbox 360 Marketplace trailer of 300 (720p), I paused and photographed the WMV file at similar timestamps, and compared component and HDMI output of both using a Canon 30D DSLR: Shadow detail was better with the HDMI.

Then I ran through the HD DVD player, using Tokyo Drift and the newly minted HQV Silicon Optics test disc—the rigorous test disc benchmarks showed the same flaws on both the HDMI and Component outputs. Jaggies That means the video processor between the older and newer Xbox is likely identical, or of identical quality. That's the processor, though. This isn't a high-end HD DVD player. As for the outputs and what I saw with my own eyes and confirmed with my camera. The HDMI's slightly better shadow detail showed itself. That detail might be lost on a lesser TV or the untrained eye. But remember that the component cables are limited to 1080i. So HDMI wins at full 1080p with no compromises, but with VGA cables you have a draw.

Then I moved to the standard def HQV tests, which is a moot test: The component cables can't upscale standard-def DVDs. They run at 480p, no matter what. The upscaling you'd see is being handled by the TV. We're really testing the TV, not the component output. HDMI wins, with another tie for VGA.

Playing games, Command and Conquer and Virtua Tennis yielded no differences between the 1080p signals of all three cables—except the strange washed out colors that the VGA cables sometimes show (GRAW and Gears of War, for starters). The HDMI again has that shadow detail boost that comes up over and over again. HDMI wins for a better picture, even though all cables do the 1080p dance with games.

Photos. I loaded up some 1920 x 1080 images onto a thumbdrive and did back-to-back testing of both color bars and vacation photos. This is where the HDMI's shadow details were most apparent. It's worth nothing that most LCDs and only some plasmas are going to have the great shadow detail that this Aquos does. So a lesser TV will either benefit from the low-end picture boost, or it'll miss it completely. Depends.

But between that little boost, the inability for the analog component cables to a) upscale DVDs b) do full 1080p output on HD DVDs, HDMI beats it. And while the VGA cables are capable of 1080p for HD DVD and are capable of upscaling DVDs, the reported color issues should give you pause. HDMI wins with no compromises.

*Caveats: For all tests, the TV, a Sharp Aquos 52-inch 92 series, had fixed settings on standard, dot-by-dot mapping, noise reduction off. The camera's exposure was the same for both side-by-side shots.
It's possible the TV had a different calibration for its component inputs versus its HDMI ones, but then that has to be the case on the plasma I tested it with for a bit.

– Brian Lam

Xbox 360 Elite [Gizmodo]

There's a lot of good to it. The HDMI cable allows for HD-DVD at 1080p over a single cable. Good because those of us with low-end TVs don't have to depend on the TV for deinterlacing. The HDD upgrade is welcome for storing more HD movies. But those are rentals that expire. And DIY hacks as well as an official upgrade for the regular 360 will be around, it's questionable how much value that drive has.
So it comes down to HDMI and black paint.

Still, as someone who's taken an intense liking to the Xbox video marketplace and the HD-DVD player, I still want one. (Pay for one is a different story.) But what I really dream about is a version that commits the console to the living room in a much greater way. Here's my wish list:

DVR Functions: Let's start out with a bang. I want to forget about the Vista box in the living room, and shove it in the office, the way it was intended to be (See: HP ditching Home Theater PCs). Right now, to have both gaming and a DVR in the living room, the Microsoft ecosytem stupidly requires you to have both a media center PC and Xbox side by side. That's pretty idiotic. Just give the Xbox an external, USB 2.0 Cablecard tuner and a firmware update with DVR functions inside. Done.

Then...

Native Vista Media Center Interface: Right now, the sore spot on the Xbox's user interface are the music, photo and video browsing menus. They're slow when it comes to large amounts of media, even when stored on the Xbox. Maybe it's not so bad, but it pales in comparison with Vista's Media Center interface, which can be accessed only when you're using the Xbox as an extender to a Vista PC. We'd like that interface for playing back media on the Xbox as well. We know they didn't do this because they wanted to keep the whole UI consistent, but right now it falls apart when doing anything beyond the very basic.

That amazing crossbar, which could be the only time in history where Microsoft has trumped Apple's UI (see Front Row), should somehow be integrated more tightly into Xbox's basic media playback. I'm not saying it would be easy, but it would be nice to not have to depend on another machine in the house to access the best media playback UI in the industry, which is already on the box. And it would be great if you kept the access to Internet video services that compete with Marketplace, if for no other reason than no single provider of video is going to have everything. Open up the box just a bit and make it more powerful.

External Hard Drive: The 120GB HDD will hold more HD flicks than the four or so that the 20GB version does. Let's assume that one day soon you'll be able to buy movies and not just rent them on an Xbox. Wouldn't it be nice to plug in an external drive to have even more space? (Even a series 3 TiVo has more than double the space.) I'm sure you can work out a copy protection scheme that works as well as the current drives. (Which is already broken.) This is doubly critical if the Xbox is to gain DVR functions.

Cooler Chips: The still unseen cooler-running 65nm chips would be a luxury for gamers, but are necessary for a machine meant to stay silent while playing back movies. This is critical for home theater gear. Even the PS3 realizes this with its generally whisper-quiet fan system. (Folding@Home activity turns it into a hair dryer, but I'm talking about movie playback.)

Video Processing Voodoo: Couldn't hurt to spend a bit more time and few bucks on better upscaling hardware for the video setup. If you're rejiggering the Xbox to be a DVR, might as well put a dedicated encode chip in there (if there isn't already) that can also do a better job of upscaling DVDs (right now it's oh so bad) and other content, as well as give HD it strong due. I'm not a former editor at Sound and Vision or anything, but I know what can be improved upon. If you have more thoughts on this, leave 'em in the comments or drop me a line.

Built in HD-DVD drive: The external was a great upgrade; a consumer-affordable, hedged bet on an untested tech. Well, both Blu-ray and HD DVD are entrenched. And a special edition Xbox for the home theater should have the format of choice inside. But while I'm wishing and asking, let's make it a dual format player for Blu-ray compatibility, and give it burning capabilities for archiving DVR shows (Like a Vista box.)

A Docked Alternative: It would be great to see all this stuff in a single box, reminiscent of Japan's special edition PS2 with living room media functions, the PSX. But for true marketshare, I'd like to see an upgrade dock with the same setup as the special edition, including additional storage, WiFi 802.11N, card readers, CableCard slot and the proper AV inputs and outputs worthy of a home theater machine, as well as a built-in HD and burning optical drive.

Of course, if this thing ever comes out, all the Elite owners will really have something to bitch about. Regardless, the beloved Xbox has a lot more potential than just as a gaming machine. Write me your thoughts and I'll update this post with more wishes. – Brian Lam

Xbox 360 Elite [Gizmodo]

Inside the Xbox 360 Elite [Llama via Gear Lab]

They'll give you $50 for an old-school Xbox, $200 for a Core Xbox (sans hard drive), and $250 for a Premium Xbox (with hard drive). Not a bad deal at all. – Louis Ramirez

UPDATE: We spoke too soon. Turns out that if you eBay your used Xbox 360 you might fetch a few extra bucks. GameStop has the better deal on the other systems, but you can sell your Premium 360 for $300-$400 on eBay (if you throw in some games). It's not as easy as bringing it to the store, but you'll get an extra Benjamin for going the extra mile.

GameStop Offering 360 Elite Trade-Ups [Kotaku]

Check out the Photoshopping hilarity in the gallery, taking poor Hillary to places she's definitely never been. WTF was she saying, or looking at? One stolen instant, and now this. The horror! – Charlie White

What the Hell is Hillary Looking At? [Something Awful Forums, via boing boing]

However, if you're one of owners of the white Xbox 360 who just want some black accessories, those can be sold whenever. So keep checking your local Best Buy, and as soon as they get the black controllers, chargers, and headsets in, you can grab one for yourself. – Jason Chen

Thanks Tipster!

While you already know that the new Xbox Elite will feature HDMI like its PS3 counterpart has since launch, the Elite's HDMI will be slightly gimped, running at the 1.2 standard instead of the 1.3. What does this mean for you? Neither of the newest Lossless formats (Dolby Digital+ nor True HD) can be passed through its HDMI (not that you'd notice in most TV audio setups).

This is not to say I wouldn't still trade my 20GB model for the Elite—I'd just be a bit less pleased with the whole experience. On the plus side, a Spring update should bring 1080p IRE-level adjustments to the VGA port on all 360 models. – Mark Wilson

AVS Forums Thread [via loot ninja]

We don't feel like the Wii customer and the Xbox customer are the same thing. We think that as soon as the Wii customer turns 14 they want something else."

Microsoft: Wii Gamers Will Look to Bigger and Better Thing When They Grow Up [Daily Tech]

Exclusive Video: First look at the Xbox 360 Elite [on10]

Jump past the gallery for the complete details.

[Gallery Updated to Include Major Nelson's first hand photos. Thanks Ryan and Kotaku.]

Again, jump for more details.

The company also announced that an HDMI cable will be included in the package. Also, the Elite won't be a limited edition and Microsoft told us there would be plenty of systems available on its April 29 ship date. Component and composite cables will still be shipped with each Xbox 360 system, and there will also be an HDMI cable in the box. The Elite will retail for $479.99. Microsoft told us there would be no new hardware inside the Elite except for that 120GB hard drive, alluding to the often-rumored cooler-running processors manufactured with the 65nm process.

Microsoft told us it will also ship a standalone 120GB hard drive for existing Xbox 360 owners on April 29. That will be priced at $179.99. Microsoft will also offer black accessories, including a black wireless controller as well as a rechargeable battery pack and Play and Charge kit.

Also, anyone else feel like we need an upgrade path that doesn't include a black can of spraypaint? I'm happy to see this come to life, but I'm also kind of upset that I have a functional, but now second-best Xbox 360 Premium. Will we have an upgrade path? – Charlie White

By the way, don't miss our interview with Albert Penello, Director of Global Marketing for Microsoft's Xbox 360.

PRESS RELEASE:
Microsoft Unveils Xbox 360 Elite

Premium black console includes 120GB hard drive and line of new accessories.

REDMOND, Wash. — March 27, 2007 — Microsoft Corp. today announced the upcoming availability of Xbox 360™ Elite, a new model of the video game and entertainment system that will include a 120GB hard drive, a high-definition multimedia interface (HDMI) port, a high-definition cable, and a premium black finish for the console, wireless controller and Xbox LIVE® headset. Xbox 360 Elite has enough space for a library of Xbox LIVE Arcade games and thousands of songs, as well as downloadable high-definition TV shows and movies available on Xbox LIVE Marketplace. The new 120GB hard drive also will be sold as a stand-alone accessory to give current Xbox 360 owners greater choice and flexibility in their games and entertainment experience. Additional Xbox 360 Elite accessories, such as the black Xbox 360 Wireless Controller, Xbox 360 Play & Charge kit and the Xbox 360 rechargeable battery, will be available separately. The Xbox 360 Elite and its accessories are expected to begin arriving in U.S. stores on April 29.

"Today's games and entertainment enthusiast has an insatiable appetite for digital high-definition content," said Peter Moore, corporate vice president for the Interactive Entertainment Business at Microsoft. "Xbox 360 Elite's larger hard drive and premium accessories will allow our community to enjoy all that the next generation of entertainment has to offer."

Distinguished by its black finish and signature metallic detailing, Xbox 360 Elite will have an estimated retail price1 of $479.99 (U.S.) and will come packed with components and accessories for the ultimate high-definition entertainment experience:2

· Xbox 360 Elite console. The console is equipped with a premium black finish and three powerful core processors capable of producing the best in HD entertainment (up to 1080p), 16:9 cinematic aspect ratio, anti-aliasing for smooth textures, full surround sound, HDMI output and DVD playback with upscaling capabilities right out of the box.

· Xbox 360 120GB hard drive. The 120GB detachable hard drive allows gamers to save their games and store television shows, movies, music, pictures, trailers, levels, demos and other content available from Xbox LIVE Marketplace.3 The hard drive is sold separately for an estimated retail price of $179.99 (U.S.).

· Xbox 360 Wireless Controller (black). This award-winning, high-performance wireless controller, now in black, features the Xbox® Guide Button for quick, in-game access to friends and music. It has a range of up to 30 feet and a battery life of 30 hours on two AA batteries. It is sold separately for an estimated retail price of $49.99 (U.S.).

· Xbox 360 headset (black). Now available in black, the headset lets gamers strategize or trade taunts while playing games and send voice messages to friends on Xbox LIVE.

· Xbox 360 HDMI cable. New to Xbox 360, HDMI allows consumers to get HD video (up to 1080p) and multichannel surround sound, all from one cable.

· Xbox LIVE Silver Membership. With this, gamers can chat with friends online, collect achievements and gamerscores, send and receive voice and text messages, and access Xbox LIVE Marketplace content such as game demos, HD movies and TV, as well as the best in downloadable games from Xbox LIVE Arcade.

· One-month subscription to Xbox LIVE Gold. An Xbox LIVE Gold Membership provides a complete online entertainment experience. Those who subscribe to this premium service can engage in competitive online multiplayer matches, tailor their matchmaking via feedback and accomplishments, chat with more than one person at a time, and take advantage of unique privileges in the Xbox LIVE Marketplace and Xbox LIVE Arcade.

The following accessories for the Xbox 360 Elite console will only be sold separately:

· Xbox 360 Play & Charge kit. Complete with a charging cable and a black rechargeable battery pack, the Xbox 360 Play & Charge kit allows gamers to recharge their Xbox 360 Wireless Controller without interrupting their gameplay. it is sold separately for an estimated retail price of $19.99 (U.S.).

· Xbox 360 rechargeable battery (black). The rechargeable battery pack provides more than 25 hours of gameplay per charge. It is sold separately for an estimated retail price of $11.99 (U.S.).

Other bullet points from Microsoft:

· For the first time ever, Warner Bros. Home Entertainment will be releasing its direct to video movies exclusively in high definition on Xbox LIVE simultaneous with their availability on DVD, starting with "Sublime" and later offering "Babylon 5: The Lost Tales."

· A&E Network. "Dog the Bounty Hunter," "King of Cars," "Gene Simmons Family Jewels," "Driving Force" and "Criss Angel Mindfreak"

· ADV Films. Top offerings from the #1 producer-distributor of Japanese animation ("anime") outside of Japan

· National Geographic. The television series "Is It Real?" and "Taboo" as well as programs such as "21 Days to Baghdad" and "Air Force One"

· New Line Cinema. "Snakes on a Plane," "Texas Chainsaw Massacre: The Beginning" and "Tenacious D in the Pick of Destiny," plus top titles including "Austin Powers: The Spy Who Shagged Me" and "Magnolia"

· TotalVid. A broad action-sports offering including extreme skiing and snowboarding, skateboarding, motocross, surfing and mountain biking

Current partners include:

· CBS Broadcasting Inc., Lionsgate Entertainment, MTV Networks Co., New Line Cinema, Paramount Pictures Corp., Turner Broadcasting System Inc., Ultimate Fighting Championship and Warner Bros have all made content available on Xbox LIVE. Through those partnerships, content is available from [adult swim], CBS, Comedy Central, CW, Lionsgate, MTV, MTV 2, NASCAR.com, New Line Cinema, Nickelodeon, Nicktoons, Paramount TV and Film, SPIKE, TBS, UFC, VH1 and Warner Bros TV and Movies. In fact, more than 1,500 hours of content is available today for download.

Data points:

· To date there have been more than 135 million downloads from Xbox LIVE Marketplace and 70 percent of our connected customers are downloading content

· TV and movie downloads have been a blockbuster success, driving a 400 percent increase in Marketplace since launch

· Users are spending more than 40 percent of their time using their Xbox 360 for music, movies and TV

· Within four months of launching, Xbox LIVE has become the number one online distributor of television and feature film content in the living room where it's most easy for consumers to access.

· Is currently the ONLY online distributor of major feature films and television programming in high definition (HD) resolution.

About Xbox 360

Xbox 360 is the most powerful video game and entertainment system, delivering the best games, the next generation of the premier Xbox LIVE online gaming network and unique digital entertainment experiences that revolve around gamers. Xbox 360 has a catalog of more than 160 high-definition games and is available in 37 countries. More information can be found online at http://www.xbox.com/xbox360.

About Microsoft

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Most of our conversation was about denying 65nm process chips and quieter disc drives, but he did confirm that new marketplace announcements would be made later in the week. Is that related to the Netflix speculation we were toying with yesterday?

Gizmodo: Will there be a new processor inside the Xbox 360 Elite, perhaps one using a cooler-running, 65nm process?

Penello: It's interesting. There's been a lot of questions about that, and the answer is, the insides of the boxes change all the time. There's nothing specific going on with Elite regarding anything like that. We make changes to the boxes all the time, just as part of cost reductions and continuous improvement, so no, there's nothing really interesting to talk about there.

Gizmodo: There was talk about how the processor was going to be cooler-running and perhaps quieter.

Penello: No. we haven't announced anything like that.

Gizmodo: So it's pretty much the same innards, except for that HDMI connectivity and a 120GB hard drive?

Penello: Right. It still plays all the same great games that the core system plays and the regular Xbox 360 plays. It's just the black finish, the HDMI and the upgraded hard drive, right. And obviously it also includes the cable, which we feel is important—to make sure that no matter what HD interface you have on your TV, when you take the console out of the box, we provide you with the cable that you need.

Gizmodo: That's good, a lot of big box retailers are selling those HDMI cables for about the same price that's the difference between the regular Xbox 360 and the Elite upgrade.

Penello: Yep. Exactly right. HDMI cables are pretty expensive. I would say the average price is about 50 bucks just for the cable.

Gizmodo: Is this same release date going to happen with the outboard hard disk as well?

Penello: Yes. It'll be out at the same time, as well as the black accessories.

Gizmodo: So pretty much what we're going to report is that all the rumors are true.

Penello: Yes, there are a couple of things that they didn't get. They obviously didn't know about the inclusion of the cable, and there are a lot of questions about whether it was going to be a limited edition or not. But yes, a lot of the stuff that I've seen was pretty close.

Gizmodo: You can't give us any sort of information about the future of the processor and how that might be upgraded?

Penello: Again, the thing about that is, it's not going to really be particularly newsworthy. Components have changed since we launched it and will continue to change. There's no upgrade of the processor. We might be doing cost reductions and things like that, but it's nothing that the consumers will ever notice.

Gizmodo: You did change the DVD drive, didn't you, so that it's quieter?

Penello: What's interesting is, that was a rumor that was going around that's also interesting in its propagation, but the reality is, we have several different manufacturers of DVD drives, and people claim that they believe that they've heard ones that are quieter, which is interesting, because I don't really know anything about that.

Gizmodo: That's not true, then? You're denying that?

Penello: What I'm saying is people seem to have observed quieter drives, and I obviously can't say that they're not observing something, but what I am saying is we have multiple vendors of drives. There isn't a louder drive and a quieter drive.

Gizmodo: So one week you might have one in there, and then another week you might have another, depending on availability?

Penello: We have a lot of different components in the box. There are 1,500 different components in the box. I'm really not trying to be flippant, because a lot of the sites are sort of claiming that there is these specific components that are going to do specific things, and the truth is, there are infinite numbers of combinations of the console in terms of components and who they're manufactured by.

Gizmodo: That 120GB drive in the Elite and the stand-alone drive is big enough to hold a lot more HD movies. Will there be more downloadable content with the Xbox Live Marketplace service?

Penello: There's going to be a couple of other announcements coming later in the week around Marketplace and some new partnerships we have there. I can't really share a lot of the details right now, but there's going to be some more exciting news around Marketplace later in the week.

So there's a lot of excitement around HD right now, particularly around the success of Xbox Live, and the digital distribution that's really blown us away. We had good expectations for it, but it's exceeded our expectations. There's been 135 million downloads from Live Marketplace, and 70 percent of the people connected to Live are downloading something.

Since we launched the service, there's been a 4x increase in Marketplace activity since Video Marketplace launched. People are spending about 40 percent of their time using the Xbox 360 for a lot of these entertainment-type experiences like music, movies and TV. So Marketplace has been a tremendous success, and something we're very excited about.

It was important for us, and one of the pieces of feedback we previously had was that for heavy Marketplace users, our existing storage capacity was not exactly where people wanted.

Gizmodo: Tell us more about the partnerships.

Penello: It depends on a lot of things coming together. We'll get back to you with more on that. We're not making any announcements right now, but there are going to be some later this week.

Gizmodo: It must have something to do with IPTV, right?

Penello: No, it's going to be an announcement around partnerships that we're going to have coming onto the Video Marketplace service.

Gizmodo: When will we be able to record live TV and have some of the same networks that are on cable using Xbox 360?

Penello: That's the announcement we made at CES around the IPTV and Xbox 360.

Gizmodo: When is that going to be available? How's that going?

Penello: What we're saying is that we'll be in trials later, late in the summer, and possibly consumer rollout in the fall, but we haven't made any...what we were really showing at CES was the two technologies, the IPTV technology which has already been announced, and then we actually had it running on an Xbox 360. We haven't really announced any specifics about when that's rolling out. Of course, IPTV was already rolled out last year in many markets.

Gizmodo: How's it going with games on the 360?

Penello: It's really about the games this year. This is going to be an unbelievable year for games. We feel really good about our game lineup. We've had the number one title across all platforms for four months in a row with Gears of War, Lost Planet and just most recently, the release of Crackdown. We have multiple million units sellers on the console, with Call of Duty, Gears of War, Ghost Recon, Advanced War Fighter and Madden. So we've got a really great ecosystem of titles out on the market right now.

There's also a sea change going on around exclusivity, and I'm sure you're familiar with the recent announcement around Devil May Cry coming to Xbox. Many franchises that were previously associated with the PlayStation brand, like Guitar Hero, Grand Theft Auto and Virtual Fighter are all coming on Xbox.

On top of that, we have our own exclusives, with things like Forza 2, Mass Effect, BioShock, Splinter Cell, and obviously Halo 3. So, for us right now, it's really important to emphasize, because there are a lot of discussions and a lot of things going on around Xbox Live and Video Marketplace that are really exciting, but it's important for us—it's still all about the games, and clearly this is going to be an amazing year for games. I don't know where people are going to get the time. – Charlie White

For more, check out our lead story about the Microsoft Xbox 360 Elite:
100% Official: Xbox 360 Elite Moves from Fanboy Wet Dreams to Reality

How exciting? The guys at Wired are almost "100% sure" it'll be Xbox 360 Elite kind of exciting. Combine that with the just-leaked production photos and it looks like Wed will be a big day for the Xbox fans indeed. We shall see.– Louis Ramirez

Microsoft to Announce Xbox 360 Elite on Wednesday [Wired]
Xbox 360 Elite Systems Spied on Chinese Production Line [Daily Tech]

This jibes with what I was told back in January when I asked Microsoft reps during the IPTV demo about a souped-up 360 to more adequately handle the demands of IPTV—namely a high-def output (HDMI) and a larger hard drive, which was to "stay tuned." With VOD (which is built into the IPTV setup, along with Live Marketplace, obviously) and DVR, 20 GB just doesn't cut it, regardless of how good the compression is.

VOD? IPTV? DVR? Media streaming? The 360 is looking more and more like the best convergence box of its generation. I'm all over that Elite, whenever it drops. Of course, it helps I didn't already spend $400 on the soon-to-be lame-o regular 360. Suckers. — Matt Buchanan

Image note: The IPTV screenshot is real, the Elite mockup probably isn't

Microsoft To Announce The Xbox 360 Elite [Mercury News via Guardian Unlimited]