Xtranormal makes a fun tool for making animated shows with cartoon characters. It could also be a tool for making machinima, if the company manages to license characters from game companies.
In the demo I saw last night, Xtranormal's Paul Nightingale wrote a simple script, where he wrote a few lines for two characters, added some emotion tags and gestures, and put them in a setting with a prop. He pressed the "render" button and generated a cute little animation. Quality was very good--certainly better than Saturday morning cartoons. The cuts and angles were automatically generated and kept things engaging.
The product does text-to-speech conversion so you don't need human actors, but it will also lip-synch recorded speech if you want the voices to sound real.
The Web-based version of Xtranormal will have some limitations in regards to the number of characters it will support (two, I think), their actions, and the fact that you have to "render" each animation before you can see it. A downloadable version will allow more characters, more interaction between them, and it allows for a real-time preview of your show.
Also coming: A tool to make character models from real photos (see also, BigStage, from CES). How about Xtranormal porn? "It's only a matter of time," Nightingale said.
This will be a really fun product to play with when it comes out in the second-quarter. A private beta is scheduled for April.See also: SceneCaster, which could end up making sets for Xtranormal characters.