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Likely as part of greater initiative to expand its casual gaming audience, Microsoft is rumored to be planning a new, customizable "avatar" system for Xbox Live users.  Much of the info was culled from a preview report (now offline) by marketing research firm Intellisponse, which apparently is a handy roundup of what to expect from the likes of Microsoft and Activision this coming E3.

Unlike the discussion board style pics currently used alongside user Gamertags, the new XBL avatars will be realized in 3D like Nintendo's Mii and Sony's "Home" avatars.  The XBL avatars aren't just eye-candy; like the Nintendo Miis, they can be used as player characters in "various arcade and retail games" as well.  Current Xbox Live subscribers can get in touch with their inner avatar later this holiday season, possibly as part of a new Dashboard update.  However, the Intellisponse report suggests that "new console owners" can get cracking on XBL avatar creation sooner, which suggests that new XBL subscribers will have access to an updated Dashboard.

Another step towards catering to casuals will be the introduction of new social interactive games over XBL, dubbed "SGBs".  These won't just be downloadble XBL Arcade titles; instead, they can include live events like television-style game shows which XBL users can participate in for things like prizes.  In fact, examples provided by the Intellisponse report include XBL versions of "Jeopardy!" and "Who Wants To Be A Millionaire?".