Technology editor, BBC News website
Microsoft is hoping to woo new consumers to its Xbox 360 platform with a focus on social gaming and its blockbuster franchises.
At the E3 games summit in Los Angeles, the firm announced a re-design of its online games system Xbox Live with an emphasis on building communities.
Microsoft's Don Mattrick said the aim was to put the Xbox 360 "at the heart of the living room".
However, reports of a price cut for the console did not materialise.
'Next level'
Mr Mattrick predicted the Xbox 360 would outsell the PlayStation 3 worldwide in coming years.
He said the games industry as a whole was poised to become larger than both the music and film industries. 
He said: "We knew...someday our industry would be the biggest form of all entertainment.
"That day has arrived. Today our industry belongs to everyone."
He added: "Games are now the leading driver of all industry spending, outselling music and outstripping box office revenue."
Microsoft announced a series of games and services as it attempts to emulate the success of Nintendo's Wii in attracting new audiences.
The refresh for Xbox Live takes on board some of the characteristics of Nintendo's system, with the introduction of individual avatars to represent gamers, something its rival has done through Mii characters.
The company also announced a social karaoke game, called Lips, which looks to capitalise on the success of Singstar on the PlayStation.
Shane Kim, head of strategy and business development for Xbox, denied that the firm was copying its rivals.
He said: "We're not claiming to invent music games, or avatars. But we're innovating by bringing something new to these games, and taking them to the next level."
The firm unveiled Xbox Live PrimeTime, a new service which will introduce online quiz games made in conjunction with the TV giant Endemol.
"This is a new category of games for the whole family," said John Schappert, head of Xbox Live.
The press conference in Los Angeles was dominated by news of releases of some of the console's biggest franchises.
British developer Peter Molyneux announced that role playing game Fable II had finished development and would be released in October.
Gears of War 2, from US developer Epic, is due for release in November while the latest incarnation of the Final Fantasy series, Final Fantasy XIII, will hit the Xbox 360 for the first time along with rival platform PlayStation 3.
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