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Neon is a piece of software built into every Xbox 360 made. It's available for you to launch whenever you play music on your Xbox 360, just start a track and press the Y button to make the Neon go full screen.
At the most basic level, and that which you see when you play audio on the Xbox360, Neon is a music visualizer. As the music plays, Neon presents a series of different effects that react to the audio input.
However Neon is much more than just a music visualizer. It belongs to a category of software called "light synthesizers". What distinguishes a light synthesizer from a visualizer is interactivity. Although Neon can function as a very competent visualiser, that's just what it does when it's not being used, just like the spectator mode of a game. Neon is there to be played with, so when you're listening to some music, put the visualiser full-screen, pick up the controller and prepare to explore.
Use the d-pad on the controller to shuffle through over 100 different effects. Once you start changing effects yourself, the auto change mode will disengage and you'll be in full control, only changing the effect when you want it changed. That way you can time effect changes so that they occur at just the right time in the music. Even if that's the only interacting with Neon that you do, the result will be a far more coherent and "choreographed" display than could be achieved in any purely passive, non-interactive mode. The left stick is used like a camera throughout Neon's 3D effects, pressing in the left stick results in a "Zoom" effect.
Controller 1 - Controls Camera and effects
Controller 2 - Controls Speed and light
Controller 3 - Controls amount of Objects on Screen
Controller 4 - Controls Spinning of Tunnels