UPDATE: Apparently bad news doesn’t come in fives, they come in threes x 2. Kudos to 1UP for going forward with a story that started out as a potential gag on NeoGAF. The story involves “Da Man” Jeff Bell, Corporate Vice President of Global Marketing, Interactive Entertainment Business at Microsoft (let me repeat that for emphasis: Corporate Vice President of Global Marketing, Interactive Entertainment Business) pulling a Kramer and responding via Private Message to a heckler on the NeoGAF forums. Good job Jeff, way to go stir up the bee hive.

And I ask – what the hell is going on over at Microsoft?

Bad news comes in threes. So what do you say when it comes in “five”s? Or is it just another trilogy of horror? In this case, Microsoft has their hands full of bad news, the first time this generation where they’ve gotten used to Sony’s PR follies over the past two years. Even still, when all major news outlets have caught on to the PS3 “price cut” for what it really is, Microsoft’s avalanche of atrocities keeps on rollin’.

First and foremost is the dissention of Peter Moore. Here is someone poised as the figurehead of the second most popular gaming console worldwide, at a critical moment of its lifecycle, who decides to jump ship. Granted, his compensation at EA, including his $1.5MM signing bonus, was probably hard to resist. What we all don’t know is how long this deal was in the works. Perhaps his evident lack of enthusiasm during the E3 press event was because he had already “checked-out”.

His post-event interviews seemed off as well. I thought it was just because he was having a bad week. After all, having to answer to a $1 billion charge to repair defective consoles isn’t an easy thing to do. Or maybe he was just disappointed by the event’s critical reception. But now we all know, don’t we?

If he still had his head in the game, maybe he would have planned the event to make a bigger splash. Maybe he would have gone that extra mile to broker that next big exclusive deal. Or maybe he just would have hit pause about two times less than he now infamously did.

Does he know something we don’t about the future of the Xbox? Is the writing on the wall that it will be nothing but an unprofitable business venture for Microsoft? Does he hear the sound of Sony on his heels? Jumping ship at such a critical time, having arguably the strongest holiday lineup of any console this year, why leave when success is so close? Only time will tell, but I have a suspicion there are some good stories trapped in that head of his.

But with Microsoft’s billion dollar hit (bad news #1), the poor showing at E3 (bad news #2), and Moore’s departure (bad news #3); things could only get better, right? Wrong.

Let me introduce you to bad news #4 – Halo 3 will ship without cooperative play over Xbox Live. Before you start screaming, “fanboy!”, let me break it down. First, Gears of War set the next-gen standard with online co-op. Once something like that is done, it’s difficult for any title to go back – the bar is now raised. So for a showcase title like Halo 3 to exclude that, it tells me it’s nothing more than a rezzed-up version of Halo 2. Second, it gives Sony and Nintendo ammunition to shoot down the mighty juggernaut with words (“the Xbox 360 is technically deficient to handle online cooperative play”, “a pay service like Xbox Live doesn’t have the infrastructure to handle it, while PSN does”) and actions (watch for an announcement for Killzone 2 to have online co-op – Sony would be stupid not to make it work).

But the biggest problem, which may tie into Moore’s decision, is, “is this as good as it gets for the Xbox 360?” Will it be all downhill from here? For a first-party like Bungie to miss an opportunity like this may be the catalyst that turned the tides in the console war. Sure Halo 3 will still sell a gazillion units, but it doesn’t ensure that there won’t be a better console experience available on a competing platform three to six months after Halo 3’s release – a major departure from expectations and everyone’s experience with the unstoppable machine that was Halo 2.

But the bad news doesn’t stop there – Aaron Greenberg has stated there will be no X07. That means, not only did we not see what was coming in 2008 at E3, but there will be no big unveiling of 2008-and-beyond announcements and exclusives. That also means, for example, if Microsoft were to broker a big deal with Capcom, there would be no outlet for them to trumpet the partnership. That means, the word doesn’t get out to the major news outlets, at least without the pomp and circumstance usually required to garner their attention. Which means, Capcom loses out. Which means, why do an exclusive deal if it’s not going to make waves?

So while consumers scramble to buy a Wii on potential, and the PS3 gains momentum with a bright 2008 outlook, Microsoft is left to salvage their management team and scrape the bottom of the barrel of its remaining good news to counter the barrage of disappointment that is seemingly on the way.