Microsoft opened the Electronic Entertainment Exposition (E3) 2004 trade show with a two huge announcements at its preshow press conference. First, Bungie Studios and Microsoft confirmed a hard release date for Halo 2, the most highly anticipated console game ever, and demonstrated the game's multiplayer power. Second, Electronic Arts (EA) and Microsoft confirmed that the upcoming EA game lineup will be fully compatible with Xbox Live.

Let's get to the first and foremost topic on everyone's mind: Halo 2. To the delight of the crowd, Bungie demonstrated several of the game's multiplayer options on Zanzabar–Hell on Earth. The armor is fully customizable, so gamers will be able to create their own unique Master Chiefs. One of the coolest aspects of the demonstration was how the Master Chief picked up two weapons and used them simultaneously. That's right: dual-weapon wielding. The right and left triggers fire their corresponding weapons, giving the Master Chief more annihilation power. The Halo 2 vehicle demonstration was also exciting. The vehicles now have a boost, which immediately doubles their speed for optimum ramming or fast getaways. All the Halo 2 vehicles are destructible, another terrific feature. When a rocket launcher blew the Warthog to bits, a tire flew in the air and landed at the Master Chief's feet. The Master Chief then bent down and hit the tire. The tire wasn't just part of the environment; it was interactive. Such elements actually became part of the game, letting you, for example, pummel an opponent with the scrap metal from the vehicle that was just obliterated. If your vehicle isn't destroyed, the damage it incurs will adversely affect the handling. And the last bit of Halo 2 news was the release date we've all been waiting for: November 9.

An estimated 4000 people packed the Shrine Auditorium in Los Angeles to hear the latest news about Xbox. The press conference began with previews of several highly anticipated games, including Unreal Championship 2, Shrek 2, Full Spectrum Warrior, MechAssault 2: Lone Wolf, Conker Live and Reloaded, Fable, and Star Wars Republic Commando. Conker Live and Reloaded spoofed Terminator 2 (T2), declaring, "The resistance is in need of a hero." The T2-like trailer drew laughs and applause from the crowd. Fable and Star Wars: Republic Commando were also extremely well received.

The leader of the Xbox revolution, Microsoft Corporate Vice President and Chief XNA Architect J Allard, took the stage next. Allard declared that Microsoft will continue on its path of "changing the game." The company is uniquely positioning the Xbox as the industry leader, and Allard believes that the company can achieve this goal by concentrating on the Xbox software. Microsoft has historically highlighted the software's ability to maximize hardware benefits, and the company will apparently use the same strategy with the Xbox. Online gaming was another topic of importance for the Xbox team, as demonstrated by a hilarious parody of "The Apprentice" called "The Novice." Donald Trump gave Allard the task of creating an online gaming community. Their fictitious competitors were three extremely pathetic characters from Sony who lacked vision. Obviously, the Xbox team was victorious with Xbox Live. Trump subsequently fired the Sony team.

The Xbox team then shared the most recent Xbox Live numbers with the crowd. Microsoft has sold (not shipped) 14 million Xboxes and is fast approaching 1 million Xbox Live users—a growth rate nearly twice that of HBO, TiVo, and other companies.

Xbox Live will soon contain several exciting new features, including the ability to use video in-game. Voice mail will expand to include video mail and video chat. Another new Xbox Live feature will be called Xbox Live Arcade, in which Microsoft will partner with third-party publishers to offer classic games such as Dig Dug, Galaxian, and Zuma for download.

Microsoft XNA was also a hot topic, which resulted in a demonstration of Crash, followed by an extremely impressive demonstration called Crash Reloaded, which featured two Saleen S7s hitting head on. The incredible demonstration was developed entirely with XNA technology.

A new Xbox racing game, Forza Motorsport, will be a completely customizable racing experience. Users will be able to define almost every detail of their vehicles, including paint, spoilers, suspension, engine, tires, and wheels. The game will also feature a robust damage system in which vehicles will experience noticeable performance deficiencies when damage is incurred and users will have to repair their vehicles to regain the lost power. Two other highlighted games included Vanguard: Saga of Heroes, from the creators of EverQuest, and Doom 3. The Doom 3 trailer, which was rendered entirely on the Xbox, was quite impressive.

At the end of the press conference, EA and Microsoft announced that EA will publish versions of its best-selling video games for Xbox Live. Robbert J Bach, Microsoft senior vice president of the Games Division and Chief Xbox Officer (CXO), introduced EA's president and several surprise guests, including Muhammad Ali, Carmelo Anthony, Marshall Faulk, Marcus Naslund, Michael Okefor, Larry Fitzgerald, and some guy who plays soccer. The announcement ushered in a new Xbox Live era with EA, which owns about 25 percent of the gaming software market.