Asked if Microsoft will utilize microtransactions with Avatars, Live boss John Schappert said in an interview with Venture Beat, "That may be in the future. In the near term, we want to launch these with great customization and a great library of accessories this fall.

"I think there is a lot more we can do with them."

He said Microsoft will continue to expand Avatar offerings as time goes on. "Our goal is not to create a sterile environment where you move furniture around."

Commenting on Avatar’s resemblance to Nintendo’s Miis, Schappert said, "I have to make a shout out to the Miis and say that Nintendo did a phenomenal job integrating them into the Wii games. There was a lot of inspiration from them."

Xbox Live’s Avatar’s are expected to arrive this fall with the arrival of Xbox 360 next big dashboard update.