This isn't some 2-minute clip, so make sure to dim the lights and pour yourself a glass of wine before partaking. The satin robe is optional.

We're sitting here in Mascone's South Hall. The show should be starting in about 20 minutes or so.

I'm told by multiple sources that Microsoft has at least one big announcement planned for their talk today. If you recall yesterday we posted our best guesses for today's talk saying that the show would have Microsoft announcing (again) Live Anywhere, an XNA Arcade (perhaps in blade form) and Gears of War 2. They're still best guesses, but we've heard rumblings that at least two of them are sort of right.

I'm still going back and forth on Gears of War 2, not because I doubt its existence or that it's ready to be shown, but because I don't know if the Game Developers Conference is the best place to announce a triple A title. Fortunately, we're going to be finding out in the next hour.

Hit the jump to follow the live blogging and make your own predictions.

Oooooh ho ho. This just in from Mike McWhertor, sitting two seats over. The official Gears of War 2 press release just hit... in Italian. It coming to the 360 this November. The release will be hitting the site in a second or two.

We just tracked down a Microsoft spokeswoman who told us no comment, but the look on her face when I told her that the press release had leaked out early said loads more. She said to watch the conference for any announcements.

Five minutes until the show starts and they just started playing the James Bond music from GoldenEye.... hmmmm I wonder what that could mean.

Jamil Moledina, executive director for the GDC, just took the stage. He's talking about how change is important in gaming. Now he's talking about John Schappert, who started as a programmer. He founded Tiberon in 1994. In 2002, Schappert left Tiberon to head EA Canada, then he become head of EA Studios. Last year he moved over to Microsoft where he manages all platform technologies. And here he is... we didn't see him there.

"As the new guy there's an expectation I would come out with a gaming tattoo or giveaway a truckload of TVs. Sadly I don't have any tats or trucks."

He's walking us through his personal gaming history... starting with Desert Strike.

Now he's on to Madden, talking up the old-school history of the game.

He's popped up the old "We See Farther" poster now and now he's on to the Xbox 360 and how glad he is to be working for Microsoft.

Man, he's all over the place in this intro. I suspect he wants to get to the good stuff.

Last year our industry had it's biggest year ever. Obviously we are quite the mass media.

As of 2007 gaming is bigger than the music industry on a global basis.

One reason why the demand for the Xbox 360 was so high last year was because of the games you all delivered for it. Games like BioShock, Halo 3, Madden NFL 08, Guitar Hero 3, Assassins Creed, Mass Effect ad Call of Duty 4: Modern Warfare.

These seven titles sold over one million units each on the Xbox 360 last holiday season.

Games sell better on Xbox 360, because they simply play better on Xbox 360.

He's rolling out the metacritic scores to "prove" that the Xbox 360 has better games, even when the games are on multiple platforms.

Now he's moving on to Xbox 360 Achievements. This morning the Xbox 360 community has now unlocked over one billion achievements. (A little One Billion Achievements Unlocked Achievement just popped up on the screen.)

Gamers have spent more than $250 million on the Xbox Live Marketplace, that is just for gaming content, not subscriptions or video sales and rentals.

Halo 3 saved films is tremendously popular. The Halo community uploads 100,000 pieces of content every day. That's 30 percent more than YouTube on a daily basis.

They're showing a video clip with Ken Levine, Todd Howard, Eron Egozy and other developers talking about how wonderful Live is and how they like not having to worry about the backend for it.

Over three million downloaded songs for Rock Band alone, according to Egozy.

Video is over. "And that's why I'm so happy to be here today."

You are the ones helping drive all of this growth.

I'm so excited for the potential for Xbox Live and XNA Studios. Just look at Poker Smash it was the work of three guys who scraped together their money to put it together.

We have to unleash this potential and it will take two things to happen. The democratization of development and the democratization of distribution.

Chris Satchell, chief XNA Architect, just took to the stage to talk up the platform.

Today I'm here to talk about the community side. Eighteen months ago, he reminds us, Microsoft released the XNA Game Studio, which allows people to make games for the Xbox 360.

There have been more than 800,000 downloads since it was announced. Nearly 400 universities worldwide are now using the studio on their campuses.

They also launched Dream, Build, Play which gave would-be developers four months to create a game. The result was hundreds of great games, four of which received publishing agreements for Live Arcade.

They're showing a video now of one of the developers, James Silva, staring... Larry Hryb.

Little silly.

Now they're showing pictures of him as a child an interview with his "second grade teacher." His first girlfriend who said it was really doomed from the start. Cut to Hryb crying.

Parents talks about he could have sold shoes for a living or been a product manager for Microsoft.

And Satchell is back on stage introducing Silva to the stage.

Silva is showing two player coop play in his game The Dishwasher: Dead Samurai. The game is about a dishwasher who goes crazy and kills everyone. Looks kind of neat.

He says winning the contest will let him put off growing up for a few more years.

I'm excited about getting to play Dishwasher, I'm excited about getting to play the other three finalists. But what about the other ones, it's a shame you wont be able to play.

I think we will be able to change all of that, starting today.

For the first time ever you will be able to have access to community created games through Xbox Live Arcade.

If we are going to unleash this creativity, we need to put the power in the community.

They're going to do that but democratizing game distribution which means: create, submit, peer review and play.

Let's take a look at this pipeline.

Submit: The first part is you have to create your identity. You will have to build your reputation, as your fame grows this is what captures it.

Next you need to tell the community what 's in your game.

Peer Review: It's not going to be us reviewing it's going to be your peers. First they will look for prohibited content.

Play: Ten million people on Xbox Live will be able to play your game through XNA Creators Content.

Now they're showing a couple of games created on XNA.

On to a video of community games.

What they haven't done is explain exactly how it will be delivered to games, my guess is on a blade... Hmmm? Why does that sound so familiar.

Right now you can go to Xbox Live Markketplace and you can download free trials of The Dishwasher and a number of other XNA games. According to the screen behind Satchell it's a free trial of the games.

Wouldn't it be great if you could take all of this content mobile.. What if you had a Zune wouldn't it be great if you could take those games with you on your Zune.

Well this year you can.

He's showing Zurai a Shump on the Zune. He's controlling the ship with the touch pad. Now he paused the game and pulled up a song to listen to from the Zune while playing the game. Neat integration.

That's only part of it, with XNA Game Studio you can build online multiplayer games for your Zune. You can take games from Windows to Xbox to Zune.

This year we compete the (XNA Studio) vision, we democratize game distribution.

Satchell just brought Dr. Michael Capps of Epic to the stage to show off the next version of the Unreal engine running on the Xbox 360.

He's talking about Gears, oh you know what's coming in a few. Now he's onto their backend Unreal Engine, showing off some of the games that used it including BioShock, Mass Effect and Los Odyssey.

It's been about a year and a half since we made Gears and launched it. We've been pretty busy since that 18 months ago, we've added a lot of awesome new features to the engine. I want you to think about what Gears might have looked like if we launched it today.

Tim Sweeney is on the stage to talk it up.

They added a new ambient lighting technique that helps to make the characters and object pop a bit more.

He's showing a scene with more than 100 locust running through a street.

They've also improved the water technology. Now there is light bouncing off the water, and more realistic movement.

Improvements with their Matinee software now allows you to do real-time preview in-engine.

They've also added Ageia's soft body physics tool. Oh man, they just showed a cube of meat rolling down a hill in a level. Pretty nasty.

They've also added some real-time structural analysis tools to the engine to support destructible environments.

"These are just a few of the things we've added to the Unreal Engine 3."

And he's off.

Thanks Tim, Mike and Chris. John's back on stage.

By the end of the year we expect to have over 1000 games for the Xbox 360 making it the largest and most creatively diverse platform of this generation.

He reminds us that there a number of announcing top-tier titles coming for the Xbox 360.

But the hits keep coming all year long.

April 29 will see Grand Theft Auto IV along with downloadable episodes starting Fall 2008.

Also we'll see Halo Wars and Too Human.

This is just Feb 20 and these are just the announced titles.

It's one thing to talk about these games, but another to see them.

John just brought Temco Team Ninja's Tomonobu Itagaki to show off Ninja Gaiden 2 on the 360.

"There's something I've been thinking about a lot lately, that people think the industry has lost some of its vitality. "

He said he flew in just to show Ninja Gaiden 2 to prove those people wrong. He's showing off a new build that's never been seen before, a special build prepared just for GDC.

The title screen just popped up and it says GDC Special Edition. Ooops, he got a reconnect controller message.

Wow, that's one big sword. He's in a level that seems to be in an underground cavern filled with some sort of bats and meaty-looking long-legged creatures.

Running across a bridge now into an arena filled with creatures that have chainsaws and missile launchers for arms. I wonder how they go to the bathroom?

Now he's fighting some sort of skeletal cenipede with a scythe for a tail.

There appears to be some sort of pyramid in the distance.

Oh the game allows you to record clips as you play which you can later upload to Xbox Live.

OK, back to the beating the crap out of creatures, this time a bunch of blade-handed ninja. The graphics are absolutely bad-ass and very fluid.

He's running across a land bridge, fighting these small dragons annnnnd the reconnect controller message just popped up. (Probably a low battery)

Cut scene just started, it shows this demon talking, smack-talking the human race. Hey, I'm human, you can't call me a monkey.

He's delivering an ultimatum: Submit or Die. That's the end of the demo. Pretty tight.

Itagaki reminds the crowd that it's exclusive for the Xbox 360, shipping in early June around the world. Here in North America the game will ship on June 3.

John's back, save points, Ninja cinema, does it get any better than that.

No John, it doesn't.

Now Peter Molyneux is taking to the stage to show some of Fable 2.

He will be talking up two new features and doing a live demo.

Money, we all love it, we all like it. In Fable 2 it's very important. You don't get money for doing quests, you get money for doing jobs or gambling.

He's showing one of the in-game games, which is like roulette and craps and he rolled lucky 17, which he bet on.

Here's the surprising thing, what you are seeing there is actually an export to Live Arcade game. I can take the money I win from that game and move it into Fable 2.

They will be releasing this Live Arcade game a few weeks before the release Fable 2, so you can play this game and save up your money and be rich when Fable 2 launches.

I can take this money and buy stuff.

I just wanted to point out I am a woman, that's not a confession, I just wanted to point out you can play a woman in the game.

In Fable you can get married and you can have babies, so I have been pregnant. There is no labor mini game.

Transferring money from the Xbox Live game to Fable is one feature here's another.

We are going to show off the next big thing. I've played role-playing games my life, and I live them. But what I really love is coop, dynamic coop.

At any point you can say I want a friend here in this game now. The henchman he plays in the game will be based on his hero in his game.

That's the first cool thing, the second cool feature any experience or gold he gets in my game he can bring back into his game.

You can keep on earning experience in another person's game.

His dog just noticed something in the distance and Molyneux pulled a "lookout trigger" which shows him what his dog was looking at.

Now he's showing the combat system.

The gaming combat in this world is going to be amazing. One button for swords, another button and swords. You can also switch to magic.

Enough of death and mayhem, lets go and meet my family.

Down here I have a little farmhouse I bought with my money and moved my family.

We lived here five years, we had a baby and I haven't been back for six months.

The boy just ran up to greet his mom, all in in-game graphics.

His husband just came out to greet her and the henchman coop player shot the man dead.

That can happen, Molyneux points out.

John's back up on stage to wrap things up, it sounds like.

"We are all the future of our platform."

Oh oh, the screen just turned red. And it looks like we're about to see our first taste of Gears of War 2.

It's showing silhouettes on a blood red backdrop. A man fighting a locust and then chainsawing him.

Then that gear and death's-head logo just hit the screen.

Gears of War 2, it says.

Nice, now they have CliffyB chainsawing his way through the screen.

"Sometimes the rumors you read on the internet are true."

Gears of War 2 will be exclusive to the Xbox 360 this November, 2008.

Thanks for your time guys, I need to kill some locust enjoy the rest of GDC.

New Xbox 360 SKU Revealed Yes, the Xbox 360 is in short supply, leading internet prognosticators to conclude that yet another Xbox 360 hardware version is being readied, but we don't buy it. Still, Microsoft could show up with something more developer friendly, say, with a standard hard drive. Just don't count on it.

Microsoft Adopts Blu-ray HD-DVD is dead, long live Blu-ray! Now that the hi-def format war has been officially called, will Microsoft move on, giving Xbox 360 owners an add-on that finally plays Pirates of the Caribbean in 1080p.

Resident Evil 5 Is Exclusive To Xbox 360 Capcom's zombie killer would be a good get, but the publisher-developer says it's not happening. Don't worry, PlayStation 3 owners, we'll still get to enjoy RE5's mandatory 5GB install.

Gears of War 2 Is Episodic Downloadable Content Hey, wouldn't it be neat if Gears of War 2 was offered as DLC? Errr. Yeah. It might make for a slew of Xbox Live Gold sign ups, but would piss off just about everyone who doesn't have a hard drive.

Zune Gets Gaming Functions, Live Anywhere Microsoft's Shane Kim said "never say never" about a Zune gaming, but we expect that everything from Sync to Zune to Surface will be able to play Bioshock's hacking pipe game at some point.

Netflix Comes To Xbox 360 Oh, it would totally cock up the existence of Xbox Live Video Marketplace, so we're not sure how Microsoft would benefit from such a thing, but you never know. Wait, I think we actually know. Not happening (at least not today).

Rare's The Fast and the Furriest Shown We don't expect Rare to show off Banjo Kazooie until maybe E3, but this title, which is rumored to feature Xbox Live Vision cam controls might be a neat show-off for developers.

Microsoft Buys Epic Games For $3 Billion Gamepro sounds certain that Epic would be a smart acquisition at $1 billion, but Mark Rein puts a higher price tag on the Gears of War and Unreal dev. We'll one up you, Mark, and make it a cool three billion.

The keynote kicks off at 10:30 PST, in just about an hour. Stay tuned and make your own harebrained predictions in the comments.

Tomorrow John Schappert, Microsoft Veep of Live, Software and Services, will be taking the stage to deliver the first keynote for the Game Developers Conference proper.

While in the past, GDC hasn't been a place for announcements, that changed in 2006 when Sony rolled out such doozies as Home and LittleBigPlanet to an audience of mostly game developers. This year expectations are high that Microsoft will be making some sort of announcements of their own.

On paper the keynote is about how Microsoft plans to tap into a "wellspring of talent and innovation from the broader development community" but we'd be surprised if they didn't use their time on stage to also drop a little bomb or two. Hit the jump for our best guesses.

Gears of War 2: This has almost moved beyond rumor and become fact. Word of some possible Gears 2 announcement has been making the round for weeks now. The question has almost become not if they will be announcing the sequel to the amazing Epic shooter, but who will be working on it. (Our money's on former EA Chicago head Kudo Tsunoda) We expect to hear both bits of news at the keynote in the morning.

Live Anywhere: Despite the fact that they have the stage to themselves, Microsoft (like Sony last year) still probably feels it's necessary to somehow tie the announcement of a big triple-A title to something relevant to the conference. Our money is on Live Anywhere. Earlier today in his Casual Games keynote, Chris Early talked about how neat it would be to play the casual "flow game" from Bioshock while standing in line at the bank and then go back home and use his plays in the game to unlock stuff, making his brief bit of casual play matter in a bigger game. That, to me, sounds like it could be the long-ago announced and nearly forgotten mobile implementation of Live Anywhere... perhaps tied to big games like Bioshock (which already has a mobile game in the works) and Gears of War 2.

XNA Arcade: Obviously something has to be said about Microsoft's casual game development tool, XNA. They even have an area in their XNA space at GDC still underwraps until 11:30 a.m. tomorrow. (Right after the keynote). Our money is on Microsoft unveiling a broader distribution model for XNA produced games, like, perhaps, a new blade on Xbox Live.