Microsoft has unveiled the Xbox One which will go on sale later this year.
The next-generation console was shown off alongside a new Kinect sensor and a redesigned gamepad.
The US firm described the voice and gesture-controlled machine as an “all-in-one” system offering games, live TV, movies and music.
The firm’s Entertainment and Devices Division accounted for $9.6bn (£6.3bn) worth of sales in Microsoft’s last financial year.
That only represented about 13% of its total revenue for the period – but one analyst said the importance of this launch should not be underestimated.
“Microsoft is very strong in business software and the enterprise cloud business, but its consumer businesses are facing tremendous challenges: PCs are declining rapidly and Windows Phone handsets have only a fraction of the market shares of rivals,” said Jia Wu from consultants Strategy Analytics.
“Xbox represents Microsoft’s core strategy in the consumer entertainment market, especially after it sold its Mediaroom video distribution business to Ericsson earlier this year.
“This is also the unique asset which Microsoft has that can differentiate itself from Apple, Google and several of the other large tech companies.”
Microsoft’s decision to show off its new hardware in the opening minutes of its presentation sharply contrasted with Sony’s PlayStation 4 press conference in February when the Japanese company decided not to reveal the look of its machine – a move that was mocked by some commentators.
The Xbox One sees Microsoft add a Blu-ray drive and Skype functionality to its console, incorporate vibrating feedback into its gamepad’s triggers, and upgrade the Kinect camera’s sensor to 1080p high definition resolution.
It said the new Kinect would be better at analysing body movements, allowing users to more accurately control games characters and navigate other entertainment options.
“When you’re exercising, it can read your heartbeat,” claimed the firm.
New tools will also allow users to record and edit gameplay so clips can be easily uploaded to the web.
EA Sports was first to announce new titles for the machine revealing Fifa 14, Madden NFL 25, NBA Live 14 and the fighting game UFC would all launch on the platform within the next 12 months using a new games engine called Ignite.
It said the new machine allowed it to carry out four times as many calculations a second as the Xbox 360 and 10 times more “animation depth and detail”.
Microsoft Studios also revealed that Forza Motorsports 5 – the latest in its own racing car franchise – would be available when the console launched.
The division added that it planned to release 15 games within the console’s first year, eight of which would be new franchises.
Activision also provided a first look at the next title in its Call of Duty series – Ghosts. It will use a new games engine to take advantage of the Xbox One’s improved graphics capabilities, offering more detailed textures for human skin and other features. The title will also be released on rival platforms.
French publisher Ubisoft was not part of the launch, but took the opportunity to announce that two games in development – Watch Dogs and Assassin’s Creed IV Black Flag – would be available for the Xbox One before the end of 2013.
Microsoft indicated the new Kinect would address criticism that the first one was not accurate enough
The company’s chief executive, Yves Guillemot, said he was excited by the opportunities offered by the machine’s improved specifications.
“We believe it will reinvigorate the industry,” he told the BBC.
“There’s a huge step up in graphics and there’s a big step up in terms of memory as well.
“It will take time to take full advantage of the machines because we’ll have to learn how to best optimise the technology – but even from the beginning you will see a huge difference between a game on the two different generations.”