In addition, more than 10 million standalone Kinect games have been sold, the company said.

The Kinect allows players to use body motion to control the game, rather than the traditional controller.

While Microsoft calls the sales robust, it appears the pace is slowing.

In the lead up to the holidays, Microsoft sold eight million Kinect devices in the first 60 days. But in the following 60-day period, it sold only two million more.

Still, the 10 million-strong user base has the potential to breathe new life into the Xbox platform and broaden its audience beyond the hardcore gamers. Microsoft’s competition is no longer limited to Sony’s PlayStation or the Wii, but extends to Google TV and Apple TV.

According to Nielsen, game console owners are most likely to use the boxes first to play games and watch DVDs, but after that, entertainment services are a close third.

Video-on-demand and streaming services such as Netflix, MLB Network and ESPN3 account for 20 percent of Wii users’ time, 10 percent of Xbox 360 users’ time and 9 percent of PlayStation 3 users’ time.

Microsoft said starting this spring, consumers will be able to connect to Netflix and Hulu Plus using hand gestures and voice control. Also coming this year is Avatar Kinect, which was announced at the Consumer Electronics Show in January. With Kinect, you can control your avatar’s movement and expressions, so when you smile, frown, nod or speak, your avatar will do the same.

Of course, new game titles will give users new excuses to buy the Kinect. On April 12, Ubisoft will launch Michael Jackson: The Experience, which features the artist’s songs with dance moves, and many other titles are coming.

Dennis Durkin, who serves as chief operating officer and chief financial officer for Microsoft’s Xbox video game business, told investors Thursday that Kinect – which allows users to play video games without so much as a joystick – presents business opportunities for targeted game marketing and advertising.

Kinect is a camera peripheral that plugs into the Xbox 360 console and allows players to control games with only body movements. The system uses facial recognition technology to sign in players and match them with their avatars and profiles. But the technology can also be put to use beyond those purposes, Durkin said in a presentation at an investors conference sponsored by BMO Capital Markets.

“We can cater which content we present to you based on who you are,” Durkin said. “How many people are in the room when an ad is shown? How many people are in the room when a game is being played? When you add this sort of device to a living room, there’s a bunch of business opportunities that come with that.”

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Merchants that sell digital goods lost 1.9 percent of all revenue to fraud in 2009, compared with a 1.1 percent fraud rate for companies that sell physical goods online, according to CyberSource Corp., which processes credit cards for online merchants.

Such percentages seem small, but can translate into sizeable sums of money as social networks like Facebook Inc. expand the market for virtual goods, which have long been associated with games like Second Life and World of Warcraft, where players buy items like virtual gold and clothes for avatars.

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I’m sure that Apple (AAPL) will indeed sell the Fab Four’s music via its digital music store one day. But it’s not happening at Apple’s keynote presentation tomorrow.

The Beatles estate, Electronic Arts (ERTS) and Viacom’s (VIA) MTV will be releasing a new version of “Rock Band” that features the band’s songs tomorrow. And on the same day, EMI Music Group will release all of the band’s music on remastered compact discs.

But that’s it, a source familiar with the band’s plans tells me. For now.

UPDATE: Want an on the record source? The Financial Times obliges with a follow-up:

“Conversations between Apple and EMI are ongoing and we look forward to the day when we can make the music available digitally. But it’s not tomorrow,” Ernesto Schmitt, EMI’s global catalog  president, told the FT’s Andrew Edgecliffe-Johnson.

Beatles-to-iTunes is a story that never goes away. And some day, it will turn out to be true–there’s no good reason for it not to happen. But predictions that it will happen Wednesday have been tied to wafer-thin logic.

Two years ago, the Web was convinced an announcement was in the offing because of the wording of an Apple keynote invitation. This year, even sober-minded publications are noting the timing of Apple’s keynote event and the Rock Band and CD launches, concluding that an iTunes launch makes sense too.

But I’d argue that it makes less sense: If you’re trying to convince people to spend $16.99 for a remastered copy of the White Album or as much as $250 to play along with the band’s ghostly avatars, why offer a competing product from Apple at the same time?

Nor do I see Steve Jobs expressing much interest in coordinating his marketing announcements with the likes of Viacom.

Anyway, if you really want to get the Beatles on the Web, you don’t have to wait for Apple–a quick Google search will do. Or you can head to Google’s (GOOG) YouTube, which is flooded with great clips like this: