The capabilities of the Xbox Live service are set to be extended once again later this year, with new video chat functionality and the ability to download arcade style games being announced at Microsoft's pre-E3 conference.
The new abilities were announced by Microsoft vice president J Allard at the conference, and are expected to be rolled out on the service later this year - although exact timescales aren't known, and it took almost a year for the new Xbox Live features discussed at last year's E3 to appear in the form of the Xbox Live 3.0 "Tsunami" upgrade.
Xbox Live video chat is a similar idea to Sony's recently announced Eye Toy: Chat system, and will allow video conferencing over the service using USB cameras, along with a number of fun features such as the ability to send music. It's not clear whether the USB camera will also be used in games, as Eye Toy is, or if it's solely designed for video conferencing.
News source: gamesindustry.biz