"I think of this as gaming created by the community and managed by the community but enjoyed by everyone," said Mr Satchell of the new game distribution system.

'Democratisation'

Microsoft freely distributes tools, called XNA, which gives amateur developers the chance to build games for the Xbox 360 and for Windows.

But until now the games could not be shared. The tools have been downloaded 800,000 times and more than 400 universities worldwide are using the XNA package.

Mr Satchell said it was the democratisation of development and distribution.

"There are tens of thousands of developers out there chomping at the bit; we need to unlock that potential," said John Schappert, head of Live services.

Microsoft also announced that it was planning a revenue sharing model for the community games distributed over Xbox Live.