Xbox Live: Avatars unarmed from 2012 on
With 01/01/2012, no more weapons or weapon-like items may be used in the avatar anymore because Microsoft just wants to remove that function. The information can be found in the news of the Epic Games forum. Microsoft themselves haven't commented that news so far.
Epic offers gimmicks for avatars for quite some time now. Most of them are refering to the "Gears of War" series. So far, it looks like items bought before January 1st can still be used. So, there's no need to fear that the MS Points will be wasted whatsoever.
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