Intel had a packed house last night at its keynote address, which featured the virtual garage that local company Virtual Heroes created using Epic Games' Unreal Engine 3 technology. While keynotes at CES can often be boring--Bill Gates is a brilliant and rich man, but he's not known for his personality--Intel's decision to use Smash Mouth singer Steve Harwell throughout its demonstration added life and humor to the presentation. (Smash Mouth performed later that night at the Intel After Party at The Palm's Rain nightclub.) There were plenty of laughs in the packed house and I didn't see anyone leave early out of boredom, which is traditional at some of these long-winded keynotes.

The audience was truly wowed by the garage that Virtual Heroes put together. In addition to the garage, the demo included a drive-through of Harwell's California neighborhood. His band started in that garage because his parents didn't want to hear them playing in the house. When the garage door opened and the 3D avatars and realistic faces of the other band members stood there, you could sense the excitement. Someone near me commented that it was unbelievable. And yet everything at the demo--a demo that Virtual Heroes put together in four weeks--was done in real-time.

As cool as the presentation was, what's really cool to think about is where this technology is going. Jerry Heneghan of Virtual Heroes said his company is already implementing the technologies shown--and using the new multi-core processors Intel sent over--on its military, medical and other serious games initiatives. The near future won't be about playing as some designed hero in a game. It will be about playing as yourself. Tiger Woods PGA Tour Golf 08 already allowed you to put your face in a game, but according to Big Stage, that technology is 15 years old. The technology showcased in the Intel demo is state-of-the-art and exclusive--and that company is working with Virtual Heroes and wants to work with Epic Games. The future of gaming, social networking and Web 2.0 is about to leap past these boring 2D pictures and words and enter the third dimension.