LOS ANGELES (AFP) - Microsoft on Tuesday (June 14) unveiled a slimmer Xbox One model and a line-up of coming games as it strived to make up lost ground on Sony's market-leading rival PlayStation 4.
Xbox team head Phil Spencer used a Microsoft press event on the eve of the Electronic Entertainment Expo (E3) video game extravaganza to introduce an Xbox One S that will be priced at US$299 (S$405) when it hits the market in August.
"This is just the beginning," Mr Spencer said. "We see opportunities on the horizon."
Sony late last year cut US$50 off the price of rival PlayStation 4 console, making the console available for US$350. Microsoft had earlier in that year made a similar move, lowering the Xbox One price to US$350 by unbundling it from a Kinect motion-sensing accessory.
Xbox One S was described as being about 40 per cent smaller than its predecessor.
With an eye on the future, Microsoft is also working on a powerful new version of Xbox One designed as a platform for exquisite virtual reality and ultrahigh-graphics games, according to Mr Spencer.
"Delivering the world's most powerful console is exactly what we want to do," he said.
The upgraded Xbox One model, dubbed "Project Scorpio", will be released at the end of next year, in time for the prime gift-giving holiday season, according to Microsoft.
Scorpio was announced early to provide game makers and other developers time to create content or experiences for the beefed-up Xbox One, Mr Spencer said.
Microsoft also announced that players would be able to hand Xbox One games off to Windows-powered computers due to a new "Play Anywhere" capability.
"Gamers have never had more choice in how and where they play," Mr Spencer said.
Despite trends toward play on smartphones, tablets, and personal computers, industry heavyweights are not giving up consoles which have long ruled the lucrative sector.
Sony heads into E3 as a market leader, having sold more than 40 million PS4 consoles since they launched in late 2013.
While Microsoft has not released current sales figures for its Xbox One console that debuted in the market at nearly the same time, industry estimates are that they are roughly half those of PS4.
The Financial Times on Friday reported that Sony is working on a PS4 model offering ultra-high definition graphics and computing power that can handle virtual reality experiences - but will not unveil it at E3.
Given that PS4 and Xbox One are in their third year on the market, and the Nintendo Wii U is in its fourth year, console makers will be out to fuel interest with big new games and enhanced features, according to analysts.
Virtual reality, streaming play and titles tailored for smartphones are expected to be hot themes at E3, which officially kicks off in Los Angeles.
Demonstrations of content for Facebook-owned Oculus Rift headgear are once again expected to draw crowds on the show floor, which opens on Tuesday.
Sony has a press event set for Tuesday morning Singapore time and is expected to show off what its coming PlayStation VR gear can do.
Hopes are that the company will provide details regarding price and release date.