Microsoft is developing an online streaming video service that is Netflix-like for video games. It promises "console-quality gaming on any device'.
The Redmond-based company says that gamers will be able stream blockbuster films to their Xbox laptop, desktop, or smartphone.
It's unclear if players will need to pay to play individual games, or will be able to access the entire library for a monthly fee similar to video on demand services.
Microsoft doesn't believe streaming will replace dedicated consoles in the end, but the company teased that a new Xbox hardware was in the in the works.
Microsoft is creating a Netflix-style streaming video service that will bring console-quality gaming to all devices. In its E3 presentation, Microsoft also announced 50 new games for fans - a record for the Redmond-based firm.
Xbox boss Phil Spencer also teased the new video game streaming service, which he claims will be able to 'unlock console-quality gaming on any device'
Microsoft's Executive President of Gaming Phil Spencer spoke at the E3 press conference in Los Angeles to reveal its plans to build a cloud-based services.
Spencer said that: "Our cloud engineers are developing a gaming streaming network that will allow console-quality gaming on all devices.
'We are dedicated to perfecting your experience everywhere you want to play - your Xbox or PC, and your phone.'
This method, also known as Cloud Gaming, allows players to access an extensive library of titles without the need to download or install each game.
Cloud gaming can allow console-quality video games to run on smaller devices, such as smartphones, as all the heavy lifting is done on a server, not by the device that is used by the player.
This is quite different from traditional console games that require processing everything locally on the disk and consequently require high-end chipsets.
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Xbox boss Spencer didn't reveal a launch date for the service on-stage, although Spencer has previously hinted that Microsoft's game streaming might be available prior to 2020.
The company isn't the only one with an interest in streaming games. Rival PlayStation also offers the option of streaming games to your devices.
The service is dubbed PlayStation Now, the subscription service costs PS12.99 ($20) a month and allows players to stream more than 500 titles to their Sony PS4 or Windows PC.
Sony launched its cloud gaming service following it acquired rival services Gaikai and OnLive.
But despite its focus on streaming video games, Microsoft has not abandoned its hardware plans.
It's unclear if players will need to pay to access individual titles, or will be able to access the entire library for a flat monthly cost, similar to Netflix
Microsoft has revealed plans to develop Xbox hardware, with new consoles planned despite teasers of streaming services.
Xbox boss Phil Spencer remained tight-lipped on any specifics about the forthcoming console, however, the executive did reveal that backwards-compatibility with older video games would play significant role for the new hardware
Phil Spencer used the E3 keynote to announce the sequel to the Xbox One, with hints that Microsoft could have multiple new consoles planned.
He also said that the same team that produced an unbeatable performance with Xbox One X was deep in the process of designing the next Xbox consoles. This will allow them to be able to fulfill their commitment to console gaming.
Spencer remained tight-lipped on any specifics about the console, however, the executive did reveal that backwards-compatibility with Xbox One games would play significant role for the new hardware.
Eurogamer was told by him: "When you think about the next wave of hardware, many of the massive, big games currently played will be around when the next hardware arrives."
There isn't a "2" at the middle of these games, as they are trying to take you to the next version. In the old model of games shipping playing and going away - a console switch was a simple step-function.
'We went through it with Minecraft. We didn't launch Minecraft 2 on Xbox One to try to compel everybody to move to the next console because that's not what Minecraft players want. They just want Minecraft to improve.
If you look at games like PUBG and Fortnite and you think about these massive games and ecosystems that will be available, once new hardware arrives, people are still going to want to play those games and it's going be essential for us as platforms to support them.'
Microsoft has unveiled Halo Infinite the latest installment in the popular Halo series. It will only be available on Xbox-branded consoles
Microsoft also presented an unprecedented number of new games for its players during its E3 presentation.
The company ripped the wraps off of a selection of exclusive titles, including the latest entries in its Halo and Gears of War series.
Spencer has described the company's "most diverse gaming portfolio" as the latest list of games.