E3: Microsoft unveils Xbox One S and teases Project Scorpio
Microsoft has revealed a slimmer version of its Xbox One console, the Xbox One S, which will launch in August.
The firm also announced another new console, Project Scorpio, which will offer virtual reality and 4K gaming.
It will be released by Christmas 2017 but no details of a price were given.
The Xbox One S, however, will cost $299 (£210) and include support for High Dynamic Range (HDR) gaming, with extra levels of brightness and more colour.
Pictures of the device, which will also include 4K DVD and Blu-Ray playback, were leaked ahead of E3.
One analyst said many gamers might not be ready to buy a new console so soon after the Xbox One's release.
It's an unusual move to release a new version of a console "mid-cycle", or before a completely refreshed device is launched, according to games industry analyst Ed Barton of Ovum.
"We are in slightly uncharted waters," he told the BBC ahead of Microsoft's E3 event. "There's a risk of the market already being saturated."
However, Sony will also launch an upgraded version of its PS4 console in early 2017.
Piers Harding-Rolls at analysts IHS pointed out the earlier release date for the Xbox One S could give it the edge in terms of sales.
Although much was made of the new consoles' abilities, Microsoft made no mention of its upcoming augmented reality headset, Hololens.
Analysis: Dave Lee, North America technology reporter
So not one, but two new consoles from Microsoft.
After a short message offering condolences and support to those affected by the Orlando shooting, head of Xbox Phil Spencer got straight into showing the Xbox One S - a slimmed down machine that will go on sale in August this year for $299.
Further down the line, and more interesting, is Project Scorpio.
Expected by Christmas next year, it's Microsoft's way of offering a VR-ready console. I wouldn't expect it to cost much less than $1,000, though, so parents might be a little worried if this becomes the "cool" console to have.
The show had a host of Xbox/Windows 10 exclusive games.
The pick of the bunch for me was Sea of Thieves, a multi-player pirate game that looks like great fun.
As is traditional, Sony's press conference comes several hours after Microsoft's. In the past this has given it the upper hand as it has undercut Xbox on price and learned what didn't go down well at the earlier event. Let's see what Sony will tell us about the new console it too has in the works.
Microsoft also confirmed cross-platform access, Xbox Play Anywhere, meaning that gamers who buy a title for one will be able to play it on Xbox or Windows 10 PCs at no added cost.
Cross-play will also allow people to play online with others via systems of their choice.
This was demonstrated on stage by Lydia Winters from Mojang and Saxs Persson from Microsoft Studios who teamed up in Minecraft via an iPad and Microsoft Surface tablet.
Among other new features for gamers were updates to Xbox Live, including Clubs, a hangout area for gamers, and Looking for Group, which will help players find others who want to collaborate with them online.
"It's the simplest way to find other gamers with the same goal in mind," explained Mike Ybarra from Microsoft.
Mr Ybarra also announced Arena, where professional competitive gamers can take part in tournaments.
Plus, Xbox fans will be able to order customisable controllers - selecting from eight million colour variations for example - via the Xbox Design Lab.
The controllers will cost $79.99 with additional laser engraving costing $9.99. The web portal through which people can design their own controllers is due to go live today but the devices will not ship until September.
Several big games were also previewed or demoed at the event.
Among the Xbox One and Windows 10 exclusive games were pirate-themed multiplayer Sea of Thieves, racer Forza Horizon 3, shooter Gears of War 4 and sci-fi adventure game Recore.
Fan favourites also featured, including role-playing sequel Final Fantasy XV and WWI action title Battlefield 1.
"It's truly epic warfare," Patrick Bach of EA Studios, the development firm behind Battlefield 1, told the audience.
"From epic, 64-player experiences to dramatic single-player moments, no battle is ever the same."
The variety of titles on offer would likely appeal to a broad range of gamers but overall the games had a slightly cliched feel, according to one games industry journalist.
"I still think it was quite old-fashioned games in some places - dragons, swords and guns," Chris Dring of MCV told the BBC.
He added that with Project Scorpio, Microsoft might be able to respond to criticism that the Xbox One has been outmatched by the PS4's graphics and performance.
"This is their opportunity to address that issue," he said.
Microsoft also showed off footage from State of Decay 2, a sequel to the original third-person zombie survival game which had been rumoured prior to this year's E3.
Zombies also featured in a preview of Dead Rising 4 which will feature character and weapon customisation.
And classic beat 'em up Tekken will return with a new instalment, Tekken 7, next year.
Other titles highlighted included Gwent, a standalone video game based on the card game from The Witcher 3.
There were plenty of mentions for indie games, too.
Microsoft's ID@Xbox program is currently supporting the development of 1,000 indie titles.
These include Inside, a dark puzzle-filled platformer due to be released later this month.