With Sony's PlayStation 3 in a distant third in the market, Microsoft and its 360 console is taking aim at the Nintendo Wii and its motion capture technology which has made it so successful. Microsoft said it will release technology that lets people play video games by moving their bodies instead of clicking controllers. Called Project Natal, it is designed to work as an add-on to any Xbox 360 console.

"Before, there was a barrier separating video-game players from everyone else," said Don Mattrick, senior vice president for Interactive Entertainment Business at Microsoft. "Now, with Natal, everyone can join in using the best controller ever invented: you."

Instead of a controller, Natal uses a camera to capture player's movement as they react in front of the console. This translates into letting players "move" their onscreen icons the same way that they are moving in their living rooms. No controller is needed, though the camera itself is technically the controller in this type of setup.

In addition to just movement, the system can also recognize faces using facial recognition technology. This should allow a player to log into their games automatically just by booting their 360 and standing in front of the console.

The new technology was demonstrated at the E3 Expo show, with players able to play soccer, and even block shots on the goal in the game by raising their hands. In a painting game, a man was able to name the color he wanted to use verbally before splashing it onto the virtual screen by swinging his hands.

The price of Natal was not disclosed, nor was any release date. However, it would be likely that Natal would be available before the holidays if Microsoft wants to capture the lion's share of the busiest sales time in the industry.

Natal has been pushed for years by director Stephen Spielberg, who is reportedly a huge gamer. He showed up for the demo as well.

"The vast majority of people are just too intimidated to pick up a game controller," Spielberg said. "Despite the size of the industry, still 60 percent of households do not own a video game console."

In other controller news, Tony Hawk demonstrated a new skateboard controller that will let players ride, just like a real board while playing. That controller will debut with a new game called Tony Hawk Ride.

"It looks similar to a skateboard. It's a little bit shorter, but this thing is full of technology. It knows where your feet are; it knows where your hands are; you can actually go in for grabs," Hawk said.