In the wake of an E3 without information regarding the Xbox 360's successor, we chatted with experts inside and outside the games industry to forecast the trends that may shape the system.

Donnie Darko or maybe Desmond from Assassin’s Creed aside, no one can really foretell the future. That’s why whatever will replace the Xbox 360 — and when — is anyone’s guess. “The industry’s going through a huge amount of change,” says Neal Robison, director of ISV relationship management at AMD, a technology company that supplies graphics hardware to the 360. “There’s a lot of anxiety over what’s coming next.”

This year, the Xbox brand turns 10 years old, while the 360 will blow out its sixth set of birthday candles. Going off industry chatter, and barring any colossal surprises, we’re assuming we won’t get a major technological overhaul of the next Xbox until somewhere around 2014. By then, experts are predicting much more immersive, intuitive gaming experiences and a push to ensure the next Xbox will be the only home entertainment device you need.

MORE THAN A CONSOLE

There was a time, maybe when your parents were young and sprightly, that the name “Xbox” was synonymous with just videogames.

Load up your Dashboard now and, assuming you have high-speed Internet, you can do everything from notifying your Facebook friends you’re single, to watching live games of your favorite sports teams on ESPN, to catching up on episodes of Modern Family on Hulu Plus, all without paying for cable TV or opening your laptop.

It should be no surprise then that many see the next Xbox as being even more of an all-around entertainment distribution source...potentially even Microsoft.

One week before this year’s E3, Frank X. Shaw, Microsoft’s Corporate Vice President of Corporate Communications, posted on the company’s official blog that 40 percent of all Xbox activity is now non-gaming and that its consoles are averaging 30 hours of video consumption per month. In the post, Shaw also acknowledged that “you’ll see Xbox marketed more as an entertainment brand this year.” This lead to speculation that there’d soon be the debut of a system that would fuse Xbox Live, Kinect, and Internet Protocol television (IPTV) together, and all the couch potato possibilities something like that could provide.  

“Content is king,” says Wes Keltner, president of gaming consulting firm Gun, which works with corporate brands, advertisers, and game publishers, including Xbox Live. You may have noticed more media partnerships popping up on Xbox Live, like 2010’s addition of ESPN and, more recently, Hulu Plus. Microsoft’s $8.5 billion purchase of Internet communications giant Skype in May has many dreaming of converting living rooms into videochat phone booths instead of just the place you go to mow down Cheetos and pass out while playing Black Ops.

If you don’t mind paying monthly subscription fees for certain services like Hulu Plus or (hypothetically) something like HBO GO, you can pretty much plan on telling Comcast you’re going with another option that’s more customizable for customers. “I think Microsoft would like to be your cable provider,” says industry analyst Michael Pachter.

Likewise, the more time you spend being entertained on Xbox Live, the greater opportunities there are for third-party advertisers to reach you. And those folks are starting to take notice. “If we just say the word ‘Xbox’ [to an advertiser], that doesn’t mean you’re a billboard in a racing game,” Keltner says. “We’re talking about something else here.”

Evolving Xbox and Xbox Live beyond being just a system to play games on is the one thing everyone seems to agree with. “In the long run, Microsoft’s strategy should be, and almost certainly is, to own the living room,” says Ben Ellinger, program director for game design at DigiPen University in Redmond, Washington.

It’s unlikely Microsoft would abandon Xbox’s gaming roots to concentrate exclusively on home entertainment, but you can almost certainly expect a stronger push to broaden its base. Stuff like Netflix Instant and Kinect have made significant progress in terms of outreach to a broader audience, but how far that effort extends could impact even the name “Xbox” itself. 

“The more you continue to call it a game console, and use game vocabulary, the more [Microsoft] boxes themselves into a corner instead of moving towards entertainment […] that would let them spread out,” says Scott Klososky, author of several books on business and technology. 

Xbox has an advantage over alternative content providers jockeying for your eyes and dollars, like Apple TV or Google TV, because it’s already attached to so many televisions. Right now though, “anybody who’s not a gamer, they’re not a customer,” Klososky says.

GAMES STILL MATTER

Before you storm Microsoft’s headquarters in Master Chief armor to avenge the fall of Reach and ensure those Spartans didn’t die in vain, hang on a second — good games, the developers that make them, and the industry that supports them aren’t going anywhere.

“Right now, the higher-end game developers are really maxing out what the 360 is capable of doing,” Robison says. Even still, publishers are asking Microsoft to keep putting off the next generation of hardware as long as possible, he says, since they’ve already invested so much money in figuring out the current system’s capabilities.

In response to recent visual innovations in games like L.A. Noire — which captured realistic facial performances strongly enough to make them a central part of the gameplay — Robison says you haven’t seen anything yet: “We can take this so much further.”

Through faster, more powerful hardware, the technology included in next-gen systems will allow for ultra-realistic, ridiculously rich visual experiences, with marked improvement for things like physics and A.I. With A.I., for instance, Robison claims that currently, if you’re on an in-game city street with hordes of pedestrians around, they’re all scripted to do one particular thing if you, say, decide to start shooting up in the air: scream and run away. The kind of computing power you’ll see in the next-gen system will allow developers to give individual personalities to each pedestrian, allowing them to react less with mob mentality and more as singular characters.

And Avatar-esque graphical realism?  “We’re pretty darn close,” Robison says. He wouldn’t comment on whether or not AMD is already working on the next Xbox console, but says that gamers have a lot to be excited about.

Impressive and sophisticated work from indie developers will continue in the coming years, but for his part, Keltner also predicts more AAA-level games with deeper narratives, like Alan Wake or PlayStation 3’s Heavy Rain, written by more of those who frequent circles in Hollywood than gaming conferences.

Meanwhile, the limits of Kinect’s abilities have barely been tested. In fact, Pachter says the next real iteration of gaming on Xbox isn’t going to be graphics or processing power for framerates — it’s going to be processing power for fully immersive experiences like facial recognition. His hypothesis revolves around the idea that Kinect’s camera will be able to read your face and body language — allowing various onscreen characters to respond to your emotions and thus alter gameplay accordingly.

Klososky says you could also see Kinect open up the door for things like augmented reality (AR) experiences, like projecting game elements into a depiction of your real life living room onscreen, instead of placing your image within a created game-world.

How all these experiences get delivered to you is another question altogether, though.

FUNCTIONALITY

“We all knew [the Xbox 360] was going to be hot,” says Brett Lovelady, CEO of the San Francisco-based ASTRO Studios, co-designers of the Xbox 360. “In fact, [Microsoft] kept packing more technology inside the product, so we had to vent it as much as possible. And even then, I think we underestimated that and that’s pretty well-documented at this point. You could fry an egg on that thing in the early days.”

No one wants a repeat of the Red Ring of Death/system-failure debacle that plagued Xbox 360’s early years on the market, but one thing you can say about Microsoft is they don’t often repeat mistakes. So such a forehead-slapping scenario for the next-gen console — no matter how much power is packed in — seems highly (and hopefully) unlikely. 

While ASTRO Studios is not currently working on designing the next Xbox console (Chicago’s MNML Studios, who helped design the 360 S and Kinect, declined comment for this story), Lovelady says he could imagine Microsoft offering a range of different physical presentation options.

Aside from the traditional, free-standing console, Lovelady says Microsoft could build its next system into a HD 3D television monitor, like Apple’s iMac computers. In this way, Microsoft would fully control the system’s presentation, Kinect’s cameras could be integrated into the screen, and there’d be less clutter overall.  Another idea would be to build the console into pieces of furniture, giving it a more seamless feel of integration within your living room, and making it more personalized.

As for how a standalone console could appear, Lovelady says there are two schools of thought: One is to refine the existing design, while keeping the same basic iconography, like the small step from the 360 to the 360 S. On the other hand, he says: “This is gaming. Every time you come out with something, you can make some kind of crazy, iconic, artful statement because you have that license to.”

Obviously the next Xbox’s features set, like whether or not Kinect will be fully integrated, is going to have a lot of influence on the design and how you might best utilize the device in your home. For instance, during the creation of the 360, research found that people preferred keeping the device vertical as much as horizontal. “We had to design the product with a 360-degree design language,” Lovelady says, “so that it looked good at all angles: up, down, back, and front. So that’s actually where the name sort of evolved from as well.”

You can count on continued advancements in technology and consumer trends to help mold the next Xbox, but gaming is increasingly looking like only one piece of strategy for the next generation of consoles. Soon it might not just be your best friend sending you messages on Xbox Live — it could be your Grandpa too, in between watching reruns on History Channel Instant. You might want to set your status to “Appear Offline” now.

SWEET DREAMS: Other potential features for Microsoft's next console

Cloud Storage
Imagine if for storage, your Gamertag, saves, and installed games were kept on virtual servers instead of physical hardware - ensuring you'd never have to delete a game to make room for another again. "I don't like being penalized for wanting to play more games," Keltner says. "I know there are people who like having the physical discs," Ellinger says, "but I think that'll fade over time. It'll get to the point where the advantage of being able to access things from anywhere becomes a much bigger advantage."

100% Digital Distribution/Cloud Processing
The other cloud option is maybe a little more far-fetched for Xbox, and often heralded as a "console killer" by some, but would offer an online streaming service over Xbox Live, or via an OnLive-esque micro-console - which streams games and holds saves and data. Since it's not clear whether current high-speed connections have sufficient bandwidth, and the saturation for broadband access isn't 100% across North America (or other territories), this seems more like something to happen further down the line, if at all."The folks in North America may have wonderful access to broadband, but there are a lot of places around the world where this device is going to be sold that don't have access, and [those people will] still want to buy product via physical medium," Robison says.

Videochat 2.0
There's little doubt Skype is coming to Xbox with Microsoft's recent purchase of the VoIP application. It's the possibilities here that continue to fascinate. "The microphones and the way they deal with sound on the Kinect are really sophisticated," Ellinger says. "Combined with the visuals, you get this magical effect where Kinect knows who's speaking, it knows who you are, it can center the camera on your face properly...if you get the infrastructure in there well enough, that's a science-fiction app." Or as Pachter more bluntly puts it: "Skype, Kinect, Xbox 360: I can talk to my mom from my living room? You know what? I'm getting my mom an Xbox 360, and you are too."

Controls
You've got Skype, you've got Microsoft Windows 7 phones, and you've got Xbox's already beloved standard game controller. Tom Standage, digital editor at The Economist, says the next Xbox could capitalize on Microsoft's many communications ventures by incorporating mobile phones into your gamepad. "The innovation's got to be in the controller," he says. Keltner agrees, offering up a theory that you could click your phone into your controller and all your data could be kept up to speed. Or you could design a game's level on your phone during your commute into the office, then come home at the end of the day and play your creation on your console.

An Exclusive MMO
If Blizzard creates a major MMO IP exclusively on Xbox, in the vein of World of Warcraft or Diablo, custom made for a console that couldn’t be ported to PC? “That would be the nuclear bomb,” Ellinger says.

Internet Browser
Xbox Live is such a walled-off garden,” Keltner says. “It’s a one-way conversation. There is no two-way traffic happening outside of being able to talk on Facebook or Twitter.” Would it be in Microsoft’s interest to relinquish control of Xbox Live to the unruly seas of the Internet?

X MARKS THE BOX?

We asked our experts if Microsoft should abandon the name “Xbox” in favor of something else that would appeal to a broader audience. Here's what they had to say:

Ben Ellinger, DigiPen program director: Possibly. “Xbox is a hardcore name…I’d be tempted to come up with a name you can do a mass-market campaign [for] and really grab people. It would go hand-in-hand with the [idea of] the pure entertainment box.”

Wes Keltner, president, Gun consulating: No. “Not the 720 though, that’d be so predictable and lame.”

Michael Pachter, analyist: “Never.”

Scott Klososky, business and technology author: “Yes, it would allow them to expand their audience.”

Tom Standage, digital editor, The Economist: “I’d be surprised [if they dropped it]…[Xbox] is a much cooler, hipper brand than Microsoft.”