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I have seen the future of toys, and it is augmented reality.

That was my conclusion Monday after seeing Mattel's i-Tags, new technology that will be included with action figures the company will make for "Titanic" director James Cameron's new film, "Avatar."

For those not familiar with augmented reality, it's an overlay of digital information or imagery on top of real-world objects. AR, as it's known, "is a field of computer research that deals with the combination of real-world and computer-generated data (virtual reality), where computer graphics objects are blended into … Read more

We dropped by CNBC's Power Lunch today to talk about James Cameron's upcoming Avatar movie and video game, and the related rush of interest in 3D technology. With a 16-minute preview trailer in select theaters, buzz is high, but so is the film's reported $240 million budget.

Will this give disaffected couch potatoes a good reason to get out to movie theaters (and pay a $2-4 premium)? Or will it end up like any of the previous attempts to 3D filmmaking -- consigned to the cultural kitch bin?

Check out the clip below:

Kenley Bradstreet joins the show to fill in Justin's shoes, after he has an unfortunate accident with a missing bike seat. On today's show, Jeff rants about Digg's new ads while he gets new Hoboken Twitter followers. Wilson doesn't feel too hot about James Cameron's new movie "Avatar." Violet Blue starts her own URL shortner. And Kenley brings us a story about a murderous Brazilian talk show host. Yes, it is yet another episode of The 404.

Before we get too ahead of ourselves, let's explain today's show title. Apparently, there is a blog called "Skanks in NYC," and someone called a Vogue cover model, Liskula Cohen, a skank. Using words like "psychotic," "lying" and "whoring" to describe Ms. Cohen, a judge ruled that the model has a right to know who was defaming her. Beyond the First Amendment questions that this ruling raises, Kenley wonders if this undermines the whole point of the Internet?

James Cameron has been on hiatus for the last couple of years after his massive success with "Titanic." Turns out, he's been working on "Avatar" for the last 10 years, inventing all sorts of new technology to bring his vision to the big screen. While the project has been hyped in Hollywood, The 404 gang remains unimpressed with the blue people with tails. Kind of looks like a cross between a PS3 game and Halo, doesn't it?

Before we leave, we mention the new URL shortening service from Violet Blue, sex educator and columnist. At first, we were a bit confused as to why one would need another URL shortening service, but after a few hints from the chat room, we figured out that it's a warning that the link you're about to click on might be a bit NSFW. Bravo! Finally, Kenley alerts us to Wallace Souza, a Brazilian television host. On his top rated show, he features crime busts. Turns out, he was calling hits on people to get the ratings in the first place. We think the police were tipped off when a Steadicam operator, crane and lapel mic were found on scene.

Everyone have a great weekend! Wilson will be out for most of the week next week, so expect more awesome guests to keep his seat warm. In the mean time, please, please, please call in and leave a message at 1-866-404-CNET (2638) or write to us at the404 [at] cnet [dot] com.

There may not be many hardware changes inside the PS3 Slim, but each new console will ship with the PlayStation 3 3.00 firmware update. Here's what you can expect:

There are a few minor cosmetic changes to the interface and XMB (cross-media bar). Most noteworthy is a new tab under the PlayStation Network icon called "What's New." It will highlight new featured downloadable content, news, etc., and will also be the first thing you see when powering on your PS3.

Firmware 3.00 will also introduce new dynamic theme support. These are much more involved … Read more

Veterans are often reluctant to seek therapy for service-related conditions, but rather than write them off, scientists are creating a virtual online community where servicemembers can find the camaraderie and resources to ease their return to civilian life.

The "Transitional Online Post-deployment Soldier Support in Virtual Worlds" created by the University of Southern California's Institute for Creative Technologies (ICT) will be ensconced within a corner of the virtual landscape of Second Life, a popular online 3D grid where people interact through avatars (PDF).

Also known as Coming Home, this world will contain three main areas: one for … Read more

As first outlined at the E3 video game industry trade show in June, Microsoft is readying an update to the dashboard software that runs on Xbox 360 game consoles, as well as the Xbox Live online service.

While it's not as radical a change as the fall 2008 dashboard update that added avatars and Netflix streaming, there are a lot of improvements to current features, as well as a few new ones. The dashboard update will be available for 360 owners on August 11th, but we were able to download an early version for a test drive.

Included were … Read more

How closely does your Mii resemble the real you?

I ask only because it seems that police in Japan decided to dispense with the services of a sketch artist--who knows, perhaps he was too temperamental--and used a Wii to create their own impression of a man they wanted to question.

The Mii feature on Nintendo's Wii video game console allows you to create your own avatarish persona on games such as Wii Sports. So the wise policemen in the Kanegawa prefecture apparently decided they could swiftly create a Mii of a man who may have been involved in a … Read more

Do you want to be the next John Lasseter? Is Hayao Miyazaki your hero? Aimed at the amateur animator, iClone is a feature-heavy, template-based 3D animation studio that's a must-see app if you're trying to break into the camera side of movies and animation.

With iClone, you can jump right in after the installation. You can choose from a dozen character templates, including a Hessian sack, or start from scratch with a blank template. From there, you can make slider-based adjustments to alter skin tone and eye shape as well as camera angles, zoom depth, and lighting.

Using … Read more

The guys at one of our favorite video game blogs, Joystiq, have put together a gallery of what they call "NXE Avatars of the Rich and Famous." The NXE stands for New Xbox Experience, also known as the big new dashboard update for the console, which we previewed this week. The gallery takes pictures of real-life people and contrasts them with virtual doppelgangers produced with the new Xbox avatar system.

We assume the gallery was put together with tongue firmly in cheek, since the people profiled would be totally unknown outside of the relatively cloistered world of the … Read more