Microsoft will begin selling its "Kinect" motion-sensing game system on 4 November 4, before the crucial Christmas season, hoping to lure new and casual players to the Xbox and steal a march on rivals Nintendo and Sony.
The world's largest software vendor, which has ambitions of making its Xbox 360 not just a gaming device but a hub of home video and Web entertainment, will also begin selling a smaller, same-priced version of the console this week.
Microsoft would not say how much Kinect - which plugs into Xboxes and lets players control games with body and hand gestures - will sell for, though analysts' estimates range from £30 to £120. Executives said 15 titles, including one from Ubisoft, will be available at the time of launch.
Ahead of this week's E3 convention, Microsoft offered sneak peeks of upcoming titles, including a LucasArts game in which Jedi Knights do battle with light sabers, and a fitness program that lets players compete in sports from bowling to sprinting.
The world's leading gaming hardware makers, hoping to reignite the slumping $60 billion (£40.6 billion) industry, will unveil a plethora of futuristic gadgets at the E3 convention this week.
The rush of technology comes just as the video game industry, which dwarfs the $10 billion (£6.76 billion) domestic movie box office, needs it. U.S. industry sales - hardware, software and accessories - are down more than 10 per cent to $4.7 billion (£3.1 billion) this year through April, according to research firm NPD Group.
Microsoft also said on Monday it had struck a deal with Walt Disney Co's ESPN network to broadcast live sporting events into US living rooms through the Xbox 360 games console, bypassing traditional cable providers.
Live games will be broadcast through Microsoft's Xbox Live service, and will be offered at no additional cost.
It already offers Netflix movies and Zune music and videos through its Xbox Live online subscription service. There has been talk that it will announce a deal to add Hulu TV shows to the service at E3.
The arrival of Kinect may pressure Nintendo, which pioneered motion-sensing gaming through an all-purpose controller with its Wii system. Nintendo is expected to unveil more details on its 3D games system that requires no glasses at E3.
"This year's E3 gives the gaming industry the first real opportunity to prove that it's not just about making shoot-em-up games for testosterone-fueled boys," Forrester Research analyst James McQuivey said.
"This is because the secret to the gaming industry's future is the realization that game consoles are the most powerful device in the living room," he wrote in a note.
In a surprise announcement, Microsoft also showed off a more compact, higher-capacity Xbox console that will ship to US retailers on Monday and be available to consumers this week, with a 250-gigabyte hard drive. It's believed the console will be made available in the UK on July 16, priced at £200.