Taking a page from the playbooks of social-networking sites such as YouTube and Facebook, which have long provided custom software from third-party developers, Microsoft said it will begin offering independently produced games to its Xbox Live community in advance of the holiday shopping season.

"Not only are we democratizing game development with Xbox LIVE Community Games later this year, but we're creating an opportunity for aspiring developers to start their careers on the world stage," said Chris Satchell, chief technology officer for Microsoft's interactive entertainment business group.

Microsoft also announced that the multiplayer components of its Games for Windows - Live service are now free. And it said its next revision to its Direct X application framework will let developers use the graphics card as a parallel processor.

Innovative and Quirky

According to Satchell, independently created games that successfully navigate a rigorous community peer-review system will be added to the Xbox Live Marketplace catalog for sale to consumers. "It is really a win for both developers and consumers because this will no doubt act as an incentive for game creators to continue to develop the best, most innovative games for Xbox 360," Satchell said.

Microsoft expects this autumn's launch of Xbox Live Community Games in the U.S., Canada and select European markets will double the size of the Xbox 360 video-game library to more than 1,000 titles. Moreover, the software giant is betting that accomplished gamers in search of new challenges will be enticed to try independently developed games, which are expected to be more inventive and quirky than those typically created for mass-market sales.

To jump-start the new effort, Microsoft is promoting a new Dream-Build-Play development program featuring cash prizes in excess of $70,000. The software giant also said it will be sharing up to 70 percent of the revenue with software developers who create games that make it through the peer-review process. The catch is that aspiring game creators must purchase a $99 membership in Microsoft's XNA Creator's Club to participate.

A YouTube for Games

Satchell first began thinking about "how to make a YouTube for games" in 2006. Back then, the goal was simply to help game developers share their creations "with a wider audience and get everybody involved in this new community."

As a first step, Microsoft rolled out XNA Studio -- a set of tools and technologies for its partners to streamline and optimize the game-development process.

"XNA Studio enables all developers -- from major development studios to the two guys moonlighting on a dream project in their garage or dorm room -- to create games in new, more efficient ways," Satchell told the audience at Gaming 2006. "With our partners we are going to provide people with the opportunity to develop games simply and easily for the retail Xbox 360."

Ever since, Microsoft has been improving the free XNA tool set and building resources for the gaming community, noted XNA General Manager Boyd Multerer.

"To date, we've had more than 1 million downloads of XNA Game Studio and adoption in more than 700 universities," Multerer said. "For some perspective, the incredible creative community we've unleashed worldwide is more than 25 times the number of professional developers in the industry."

Mike Kent contributed to this story.