The software maker had hoped that the news would come on stage later Wednesday, as part of CEO Steve Ballmer's keynote speech, but word leaked out after Microsoft briefly posted a video with Robbie Bach to its Channel 9 developer site.
In the video, Bach also mentions another new Xbox feature: Game Room. Game Room is a feature of Xbox Live that lets users create their own arcade. In addition to playing classic games, such as those written for Atari or Intellivision, users can organize the machines and allow their avatars and those of friends to move throughout the virtual arcade.
Through Xbox Live users will be able to invite friends to their personal arcade to show off and try out their collection. Microsoft plans to launch new games each week, with the aim of giving users a choice of more than 1,000 games during the next three years.
We'll have live coverage of everything else Ballmer and Bach have to say, starting at 6:30 p.m. PST. For a preview of the highlights of what's expected, check out this story I did earlier this week.