Microsoft, in a double-barreled media blitz Sunday night and Monday morning, was eager to tell the world every detail about its newest game technology, Kinect -- everything, that is, except the price.

Kinect is designed to connect to Microsoft's Xbox 360 game console and let players navigate and play games without a game controller or remote control. Kinect consists of three sensors -- a depth sensor, a camera and a microphone -- on a motorized device the size of a giant candy bar.

Microsoft, at a press conference held a day before the opening of the Electronic Entertainment Expo in Los Angeles, highlighted several demos showing how the device can recognize faces, read hand and body gestures and understand a dozen or so verbal commands such as "pause," "stop" and "play music." Instead of using a remote control, users can navigate through menus by using their hands in a way similar to the way character Tony Stark swiveled through virtual screens in "Iron Man 2."

So far, so good. The flow of information, however, stopped short of naming a price for Kinect, which is slated for launch this year.

Turns out Microsoft is in an awkward position here. On the one hand, its video game unit, headed by video game veteran Don Mattrick, is under orders from Microsoft Chief Executive Steve Ballmer to be profitable -- or at least not hemorrhage money the way it did in the early years. 

On the other hand, Microsoft wants average consumers and families to buy in.

The problem is that the cost of Kinect will come on top of the cost of an Xbox 360, which is currently priced at $200 to $300. The Wii, in contrast, is $200 and includes a Wii remote and the Wii Sports suite of mini-games. It doesn't take a math genius to guess which system a cash-strapped consumer will choose.

But Microsoft is hoping to change the equation by offering sweeteners -- it announced a multi-year deal to be the exclusive console provider of live, on-demand games broadcast by ESPN. Subscribers of its Xbox Live Gold online game service will have access to 3,500 live sports events at no additional cost.

The missing variable is what Microsoft will charge for Kinect. To keep costs down, perhaps Microsoft will spend less money to promote that bit of information than it has spent unveiling Kinect's other features.

-- Alex Pham

Image: The new, slimmer Xbox with a Kinect device. Credit: Microsoft.

Box- office futures have passed a final regulatory hurdle, clearing the way for the first bets to be placed in the near future, and overcoming objections by Hollywood that sought to block it.

In a 3-2 vote, the Commodity Futures Trading Commission on Monday afternoon approved a contract created by the company Media Derivatives that would allow traders to bet on the gross receipts that a movie pulls in during its opening weekend.

Media Derivatives already won CFTC approval for the exchange on which these contracts would be traded – the Trend Exchange -- but it needed the CFTC to sign off on the contract in order to allow traders to begin placing positions.

The idea of betting on future box-office receipts has faced vociferous opposition from the movie industry, led by the Motion Picture Assn. of America, which has said that the contracts would be vulnerable to manipulation and could even hurt how movies perform in theaters.

The decision Monday could still be counteracted by legislation that seeks to ban any trading in box-office futures. The Senate has approved such legislation, but it would need to be approved by the House of Representatives to make it into the final financial reform bill.

The Cantor Exchange, a Media Derivatives competitor, is awaiting approval of contracts for its own movie futures market.

[Update, 7:45 p.m.: For much more, see the story in tomorrow's Times.]

-- Nathaniel Popper

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Producer Graham King plans to launch a theatrical distribution division and is in negotiations to bring Bob Berney aboard to head the operation, according to a person familiar with the talks.

Berney, a veteran independent film distributor known for innovative campaigns for such movies as "My Big Fat Greek Wedding," "Memento" and "The Passion of the Christ," surprised many in May when he abruptly resigned from Apparition, the distribution company he founded after his previous employer, Warner Independent Pictures, was shut down by Warner Bros.

King has told associates for some time that he wanted to start his own distribution company to fill a void in the market after most studios abandoned releasing independently made movies.

King launched his independent production company, GK Films, in 2007, backed by his oil business partner, Tim Headington. It is unclear how his new distribution business, to be named GK Distribution, will impact the multi-year deal that the producer signed earlier this year with Sony Pictures. Last week, Sony executive Peter Schlessel announced he was leaving the studio to join GK Films as president.

King just wrapped production on Sony's big-budget movie, "The Tourist," starring Angelina Jolie and Johnny Depp.

King, who won the 2007 best picture Oscar for "The Departed," has been in talks with Berney in recent weeks and is hoping to conclude a deal shortly, said the person close to the matter. But, as of now, there is still no signed contract, the person said.

Neither King nor Berney could not be reached for immediate comment.

-- Claudia Eller

Photo: Bob Berney. Credit: Gina Ferazzi / Los Angeles Times

Walt Disney Co.'s ESPN has struck a deal with Microsoft to make its content available to users of the software giant's Xbox 360.

Under the terms of the deal, subscribers to Microsoft's Xbox Live Gold service will be able to get access to ESPN3, the sports juggernaut's broadband channel that carries a wide range of sporting events including Major League Baseball and the NBA as well as tennis, golf and college sports.

Subscribers to Microsoft's Xbox Live Gold service, which costs about $50 a year, will get access to the live sports events at no additional cost, as long as they also subscribe to Internet service through a cable company that provides ESPN3. Those include Verizon, AT&T, Comcast and Cox. This is the first time ESPN has agreed to release the content directly through a device that connects to a television, putting ESPN3 in more direct competition with traditional cable TV service.

Microsoft sees the deal as another way to expand its Xbox 360 beyond games into a full fledged entertainment device, said Ross Honey, a Microsoft executive who handles non-gaming partnerships for the the Redmond, Wash., technology company.

Microsoft has garnered a distinction for having a console with the most intense, gritty and complex games. That reputation, unfortunately, turned off average consumers, and Microsoft has labored in recent years to add features that would appeal to more mainstream players. Among other things, Microsoft added Netflix movie streaming, Last.fm streaming music and Facebook to its Xbox Live online service, which players access through an Internet-connected Xbox 360 console.

"Xbox Live will change the way you watch movies, listen to music and connect with friends," said Don Mattrick, who heads up Microsoft's games business.

ESPN had been discussing a deal with Microsoft for more than two years, said John Kosner, senior vice president of ESPN Digital Media. He said his company was particularly attracted by the interactive components Microsoft is adding to ESPN programming, including polls, trivia and the ability to connect with other users rooting for the same team.

"To me, the eye opener is having a live sports game experience in this video game world," Kosner said.

-- Ben Fritz and Alex Pham

Photo: ESPN commentators Josh Elliott and Trey Wingo demonstrating the ESPN 3 on Xbox 360 at Microsoft's E3 press conference Monday. Credit: Lawrence K. Ho / Los Angeles Times.

Rupert Murdoch's quest to find a way to get people to pay for news online continued Monday as News Corp. made two deals for companies that could be key to that mission.

News Corp., parent of newspapers around the world including the Wall Street Journal and New York Post, as well as the Fox network, 20th Century Fox and Fox News, bought Skiff, a maker of software that delivers information to tablets, smartphones and e-readers.

The conglomerate also took a stake in Steve Brill's Journalism Online venture, which has been developing a mechanism for newspapers and magazines to collect revenue from their online readers.

"Both Skiff and Journalism Online serve as key building blocks in our strategy to transform the publishing industry and ensure consumes will have continued access to the highest quality journalism," News Corp. Chief Digital Officer Jon Miller said in a statement. The company did not disclose financial details of the Skiff purchase.

Skiff, which was incubated by publisher Hearst Corp. as a separate company, has developed the back-end technology for displaying newspaper and magazine on e-readers in a way that resembles the original print publication. It also developed a device based on the e-ink technology, although News Corp. reportedly is not interested in manufacturing hardware devices that would compete with Apple Inc.'s iPad or the Kindle from Amazon.com

Journalism Online has also created a platform that allows publishers to choose from multiple options when it comes to charging  for online access to stories -- including the "metered model" in which casual readers continue to access information for free, but the most engaged readers pay for full access.

"We're delighted by this investment and this vote of confidence," Journalism Online co-founder Gordon Crovitz said in a statement. Crovitz was a senior executive at the Wall Street Journal and parent Dow Jones for almost three decades, but left after News Corp.'s acquisition of that company. 

-- Dawn C. Chmielewski

Image: Skiff e-reader courtesy. Credit: Skiff LLC

If you live or work in downtown L.A. and notice a surprising number of grown men with ponytails this week, there's a reason: E3 is happening at the Los Angeles Convention Center.

As 45,000 professionals from the $45-billion video game industry descend on a city where traditional non-interactive media is usually king, there's sure to be a lot of news about the future of video gaming. It's also a good opportunity to look at the state of the industry, which we'll be doing all week in The Times and right here on Company Town.

Here are a few of the big stories we have already covered, as well as things to look for this week:

• Activision Blizzard Inc., the largest video game publisher outside of Japan and one of the largest entertainment companies in Los Angeles, has come under fire for its legal battle with the creators of the hugely successful Call of Duty games. But it's not the first time Activision Chief Executive Bobby Kotick has been at odds with game creators or gamers themselves. On Sunday, The Times took a look at Activision, Kotick and what the company's past and present conflicts really mean. Read it here.

• One of the biggest unveils at E3 is Microsoft's new gaming technology code-named Project Natal and now officially called Kinect, which tracks users' movements without a physical controller. Microsoft showed off what Kinect can do with a splashy Cirque du Soleil show Sunday night (pictured right), and The Times got an early peek. On Monday, Microsoft will hold a news conference to announce specific games for Kinect, as well as other games and entertainment services for its Xbox 360 console.

• The other major console manufacturers, Sony and Nintendo, will hold their news conferences on Tuesday. Other news could pop up in news conferences held by publishers such as Electronic Arts and Ubisoft on Monday afternoon. We'll cover any interesting announcements from all of them on Company Town, but we helpfully put together a checklist of key trends to look for at the show, including 3-D and the return of the shooter, right here.

Look for breaking E3 news, as well as closer looks at notable games and interviews with industry players, here on Company Town all week. In addition, Times reporters Ben Fritz and Alex Pham will be tweeting from E3.

-- Ben Fritz

Photo: A Microsoft-sponsored Cirque du Soleil show for its Kinect peripheral. Credit: Elisabeth Caren / Associated Press

After the coffee. Before signing off on a sequel to the remake of "Karate Kid." Yes, it's come to that.

"Karate Kid" kicks you-know-what at box office. In the battle of 1980s remakes, the new version of "The Karate Kid" easily beat the movie version of "The A-Team." Sony's remake with Jaden Smith and Jackie Chan took in $56 million, while 20th Century Fox's "The A-Team" managed only $26 million. Box office analysis from the Los Angeles Times, Hot Blog and Deadline Hollywood. Meanwhile, the New York Times weighs in with a piece about how much the movie industry has riding on Disney's "Toy Story 3." That led blogger Dave Poland to rip the piece as "destructive" and inaccurate."

Cablevision heads to Marlboro Country. New York-based cable operator Cablevision Systems, which primarily serves New York City and Long Island is striking a deal to buy Bresnan Communications for $1.365 billion from Providence Equity. This is a big expansion for Cablevision, which also owns the cable programming company Rainbow (AMC, IFC and We) and the New York Knicks and Rangers. Bresnan has systems in Colorado, Montana, Wyoming and Utah serving 300,000 subscribers. More on the deal from Bloomberg and the Wall Street Journal, which noted Cablevision's recent track record on acquisitions hasn't been so hot lately. 

E3 is here! E3 is here! Gamers will be descending on downtown Los Angeles for E3, the annual video-game conference that will draw almost 50,000 attendees. If you missed it, here's Sunday's Los Angeles Times profile of Activision CEO Bobby Kotick, who has built a video-game empire but also alienated much of the creative community. As for the idea that all gamers are teenagers locked away in the basement, reality is they are 34-year-olds locked in the basement. Variety reports on the Entertainment Software Association's latest industry survey on gamers.

Could they be back? The New York Post says Harvey and Bob Weinstein are prepping yet another attempt to buy Miramax back from the Walt Disney Co. Currently, Disney is in negotiations with David Bergstein and Ron Tutor. Now the Post never met a rumor it couldn't hype into a story, and if you throw enough stuff at a wall sooner or later something sticks. Of course, the Weinstein Co. will no doubt try again to get Miramax back, so the real story is whether Disney will entertain talking to them again if the Bergstein/Tutor talks fall through.

MTV gets new script. Last week, MTV premiered its new high school comedy "The Hard Times of R.J. Berger," which can probably best be described as "Revenge of the Nerds" meets HBO's "Hung." This is just one of many new scripted shows the network is trying. Hopefully, we'll get a break from all the variations of "The Hills" if some work. The Wall Street Journal looks at MTV's latest effort at reinvention. And if this sounds familiar, it's because the Los Angeles Times looked at MTV's new script for success back in in January.

Inside the Los Angeles Times: "Memphis" and "Red" are the big winners at the Tony Awards.  Patrick Goldstein on the sure-to-be-controversial movie "Unthinkable."

-- Joe Flint

It's going to be a long week. Make it go by faster by following me on Twitter at: twitter.com/JBFlint

At a gala event Sunday night, Microsoft unveiled the name of its latest video-game technology:  Kinect.

The unveiling capped a 45-minute performance by Cirque du Soleil at the Galen Center arena, which will be repeated again Monday night before the show is mothballed and sent back to Montreal, Canada, where the troupe is based. In the video above, Cirque du Soleil's artistic director, Michel Laprise, talks about how it approached the project in creating its one-of-a-kind show for Microsoft.

Microsoft is pulling out all the stops in an effort to market Kinect, which the company had previously code-named Project Natal. The device, when attached to Microsoft's Xbox 360 video-game console, lets people play games by gesturing, moving their bodies or speaking.  

Kinect is key to Microsoft's  effort to become the focal point of living room entertainment. Its Xbox 360, when connected to broadband Internet, is already capable of playing on-demand movies via Netflix and also lets viewers rent high-definition movies and TV shows, in addition to downloadable games. 

But Microsoft has thus far been saddled with a reputation of being a console for dedicated gamers, not average families. Kinect is the company's bid at attracting people who are too intimidated by its 14-button controller. Microsoft and other game developers are expected to unveil over a dozen Kinect titles this week during the annual Electronic Entertainment Expo starting Monday in and around Downtown Los Angeles.

-- Alex Pham

Video: Alex Pham / Los Angeles Times

For the first time since summer movie season started, Hollywood got some good news it didn't expect.

"The Karate Kid" was not only a major hit in its own right, but it also came in $20 million above the highest expectations based on pre-release tracking.

(For more on the opening of "The Karate Kid" and "The A-Team," see our initial box office post.)

Since the first weekend of May, the start of the four-month period during which movies studios release many of their biggest films and collect 40% of the year's box office, there has been one big -- as expected -- hit ("Iron Man 2") and a string of disappointments or flops, such as "Robin Hood," "Shrek Forever After," "Prince of Persia" and "Sex and the City 2." Total summer box-office receipts were down 4%, and attendance was down 10%.

This weekend's success wasn't nearly enough to close that gap, particularly given the soft start for "The A-Team." But total ticket sales were up 11% from the same weekend a year ago, according to Hollywood.com, and the gap between summer 2009 and summer 2010 has shrunk to 3.4%, with attendance now down 9.3%.

If pre-release tracking is any indication -- and it hasn't always been in 2010 -- next weekend should shrink that gap further with the debut of "Toy Story 3," which is expected to have a huge opening. It could be the first movie from Pixar Animation Studios to open to more than $100 million.

In limited release, the documentary "Joan Rivers: A Piece of Work" and "Winter's Bone," the Sundance grand jury prize winner, both had solid starts, opening to $171,500 at seven theaters and $87,000 at four theaters, respectively. Both movies played at two theaters in Los Angeles.

Here are the top 10 movies at the domestic box office according to studio estimates and Hollywood.com:

In what had looked to be a tight battle of '80s brand names, a team of mercenaries was decimated by a 11 year-old.

Sony Pictures' remake of "The Karate Kid" starring Jaden Smith and Jackie Chan opened to an excellent $56 million, according to a studio estimate, while 20th Century Fox's big screen version of TV show "The A-Team" starring Liam Neeson, Bradley Cooper and Jessica Biel debuted to a soft but not terrible $26 million.

Pre-release polling had indicated that the two new films would be in a tight race for first place at the box office in the $30-million to $35-million range, with "Karate Kid" drawing more families and "The A-Team" mostly guys.

But Sony's film got off to a surprisingly strong start on Friday, indicating that it played as well to adults as to children, and expanded on its 2 to 1 advantage over "The A-Team" on Saturday as families attended matinees.

Both movies got mixed reviews, but audiences were much more positive. "The Karate Kid" got an average grade of A and "A-Team" got a B+, according to market research firm CinemaScore.

"Karate Kid" is the first movie to substantially exceed pre-release estimates in what so far has been a disappointing summer movie season for Hollywood. The film looks to be a big financial winner for Sony, which spent about $40 million to produce the picture. Fox and its financing partner, Dune Entertainment, may struggle with "A-Team," which cost around $100 million after tax credits.

Both movies have yet to open in most major foreign countries.

Three movies that opened last weekend both had relatively good holds of less than 50%. Comedy "Get Him to the Greek" declined 43% to $10.1 million, family film "Marmaduke" was down 48% to $6 million, and romantic comedy "Killers" dropped 48% to $8.1 million.

-- Ben Fritz

Top photo: Jaden Smith in "The Karate Kid." Credit: Jasin Boland / Sony Pictures. Bottom photo: Liam Neeson in "The A-Team." Credit: 20th Century Fox