Traditionally betas are used to do final product testing, however marketers have seemed to hijack the term to use as marketing demos. I remember when beta testing actually meant something and you had to actually do work to maintain your status as a tester. Now it seems betas are nothing more than a promotional tool used to build hype for a game, since there is no realistic way to make changes after a product has already shipped.

At what point did betas go from the hands of developers to the hands of the marketing team?

I think it has been the case far more this year. With Warhawk and Halo, if memory serves right, they were more in the summer, several months before release, whereas most games seem to be finishing their betas a few weeks before launch now, and normally they are still running by the time they go gold.

Certainly the LBP beta seemed to be quite a lot to do with hyping it, but of course they still serve the purpose of testing servers.

I suppose they also give the chance of companies to try and say that they care about the consumer's opinion and want their help, which obviously improves public perception of the company

not really because multiplayer games need public betas where they can get a decent amount of people on at once to test server strength, game code, catch bugs, balance gameplay, etc.

If they were demos they would be WAY more limited in features available to be played.

Yes, they are demos.

why? Because when you release your beta a month before the game releases, you're not giving yourself any time to incorporate feedback and test anything you implemented.

All these betas are really just super hyped demos.

As ssj12 said, a beta is meant to flush out the product and catch bugs/glitches while improving gameplay.  At this point, things are still being fixed.

A demo is meant to introduce people to the game in a bug-free sampler form.

In a beta, I would expect bugs/glitches.  In a demo, I would expect a scaled down version of the final product.

It seems like 'beta' keys are handed out as promotional tools rather than to seasoned testers. In the old days, you had to prove to some extent that you were willing to really commit to testing. How long is it before we see beta keys being issued in the caps of Mountain Dew?

You haven't seen new MMO betas yet, have you?

A Beta serves the dual purpose of hyping your game and giving you feedback about what works and what doesn't, both from gameplay and networking perspectives.

A demo is supposed to be representative of a mostly-finished product, and is nothing more than advertising.

Forgot to say, the only testing a Beta might do is test the servers and that would be in a game like R2.

On any of these big demos like LBP, R2, Halo 3, and anything else that has had the uber hyped demo have you ever given any special feedback to the developer? I think Halo 3 had an option to but how many people actually used it?

I just had a conversation about this. I think it happend when Google launched all their products and not a single one of them left Beta. From that point on it was "cool" to launch betas rather than the real applications.