IGN's Craig Harris tested out the WiiSpeak microphone and voice chat functionality inside Animal Crossing at Nintendo's San Francisco office. His experience seemed much smoother and friendlier than my own, possibly as a result of improvements in the technology, a quieter environment, or a voice that is capable of normal human volume. Treehouse staffers told him that the voice chat has improved significantly since E3.
Conversations came in clearly enough from multiple positions in the room, though Harris noted a drop in quality when his interlocutors in Nintendo's Redmond office drifted far away from the mic, which seems pretty obvious. He was able to converse in a normal speaking voice from his position "six to eight feet" away. However, with no option to turn the music down or off in Animal Crossing, the game tended to drown out the voice output.
There was a mysterious "Use Headphones" option available in Animal Crossing, whose function is currently unknown. Harris speculates that it sends voice and game audio through separate audio channels, but maybe it just changes some preset audio settings to optimitze performance through tiny speakers. It's not as if you can plug a headset into the Wiimote or anything.
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