MICROSOFT is set to make a splash this week with the eagerly awaited unveiling of its new Xbox game console, eight years after the last version, as it seeks a larger share of the $65bn a year global computer gaming industry.
But the small device faces some big competition from the PlayStation 4 by Sony Corp and the Wii U by Nintendo Co Ltd in a shifting market.
Gamers are gravitating to online play - suggesting the hey-day of console games are over - while Microsoft wants its sleek new toy to finally cross the bridge to the mainstream and become the family's entertainment centre.
"Core gamers are very hungry for a new machine but the difference between 2005 and now is that the stakes are so much higher," said Ryan McCaffrey, executive editor at entertainment website IGN.com, harking back to Microsoft's last Xbox release. "The entire Xbox experiment from Microsoft was for it to be the centre piece of your living room."
To that end, industry-watchers are expecting a raft of improvements from the new Xbox, when Microsoft unveils it at its Redmond, Washington, headquarters on Tuesday, from closer integration with the TV and link-ups with mobile devices to access to new and even exclusive content.
Console gaming still takes the lion's share of a growing gaming market - about 42 percent of the $65 billion world market, according to Microsoft. But playing games on smartphones and tablets, or as an offshoot to online social networks, is gaining ground fast.
Console sales have been in decline for the last four years, chiefly because of aging devices, but the first of the new generation of machines has not reignited the sector.
Nintendo's Wii U, launched in November, had sold only 3.45 million units through the end of March, well below the company's initial forecast of 5.5 million. Hopes for Sony's PS4, teased in March, are low key.
"The next wave crest isn't as high as the previous one," said Lewis Ward, research manager at International Data Corp, who calculates that about 250 million Xbox 360, Sony PlayStation 3 and Nintendo Wii units were sold between 2005 and 2012.
"I do think that consoles as a product category have peaked and the next gen devices won't match those totals," he said.