During his talk at AGDC entitled "MMOs to Consoles -- Challenges, Opportunities, Emerging Trends," Turbine's Craig Alexander, the VP of project development for the company, has confirmed that they are working on a console MMO.
The project has been in Turbine's production house for a year and a half now, and the staff is actively seeking to launch the title on Xbox 360 and PS3 consoles. Turbine does also have plans to develop for Wii in the future, although they did not go any further into that topic. Over 20 million dollars has been spent on developing the platform for this title. The targeted release date for this project is early 2011.
Craig also said during the speech that he believes that consoles will eventually pass PCs in the MMO market, making this a lucrative endeavor. He also hinted briefly at a free to play subscription model, saying that MMOs should have "minimum friction to access."
Turbine has said in the past that they will completely confirm their console MMO plans in early 2010, but speculation is still in the air as to if this is a brand new IP,
or perhaps one of their former titles repackaged for the console. (Edit: Craig has now said, and we quote, "Under no circumstances should you attempt to port a title." This now looks to be a brand new console IP for Turbine.)
We'll keep this post updated with new information as we receive it.