Microsoft is hoping to convert a new generation of gamers to its Xbox 360 console with features that allow owners to interact with one another via the internet and stream movies their TVs.

With a nod to Nintendo - which has enjoyed great success with its Wii device by reaching out to the non-core gaming audience - the software giant said the next range of Xbox games would include an online game show as well as one which allowed players to become actors in films.

It also announced a partnership with Netflix, the DVD rental company, which will allow Xbox owners to stream more than 10,000 films and television shows from their Xboxes to their TVs.

Unveiling a host of new features at this year's E3 video games conference in Los Angeles, Microsoft said it hoped the Xbox could become a general hub for entertainment in the living room, offering something more than the shoot-'em-up experiences that have been at the gaming industry's core.

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Chief among the new products to be released this autumn is a version of 1 vs 100, the television game show created by Endemol, the production giant behind Big Brother, which will allow contestants to compete in a quiz against others elsewhere in the world.

1 vs 100 will be supplemented by You're in the Movies, which lets players improvise scenes using the device's built-in camera and transfer them into movie settings, and the latest version of Guitar Hero, the popular music-making game in which players form virtual bands that compete against one another.

Also new is a feature which lets owners create an avatar - a cartoonish character custom-built to represent themselves - which can then be sent to virtual "parties" and other online environments where Xbox users come together via the internet platform, Xbox Live.

“For the last few years we have consciously and continuously fed the core gamer audience, and now we are reaching that inflection point where we have to reach out to the mainstream consumer and bring them into the Xbox 360,” David Hufford, Microsoft’s director for Xbox product management, said in an interview with The New York Times.

“So we have to appeal to the mainstream more than ever now. And what really is appealing to that mainstream consumer is that social experience; whether it’s the older consumer or the Facebook generation, they see games not as a solitary experience but as something you do with friends and family."

The company added that it had not forgotten those enamoured of violent games, previewing a new version of Gears of War 2, the sequel to one of the most popular games of 2006, as well as Final Fantasy XIII, published by the Japanese company Square Enix, which is due out next year.

Under the deal with Netflix, Xbox 360 owners will be able to pay $50 (£25) a year to access the whole of Netflix's "watch instantly" library, which allows unlimited streaming of Netflix content. They will also need to subscribe to Netflix, which charges $9 a month for the least expensive streaming plan.

Netflix has offered streaming for 18 months as an alternative to its more popular DVD mail service, but the agreement with Xbox will mean that customers can watch films on a TV, rather than a computer. Xbox already allows owners to rent films for about £3 each, but the catalogue is much smaller than Netflix's.

By some predictions, worldwide revenues for the games industry could reach $50 billion this year, spurred on by the popularity of mainstream games such as Guitar Hero and the Nintendo Wii, which has widened the appeal of computer games to older people and women.

Earlier in the week, Microsoft confirmed that the cost of the 20GB version of the Xbox 360 would come down in price by $50 to $299 (£150), and yesterday it announced a 60GB version would go on sale in August, at $349 (£175).

Separately, Electronic Arts, the publisher, showed off its line-up of games for the end of the year. New offerings included Spore, an "evolutionary" game which lets users fashion their own monsters one body part at a time, and Dead Space, a Alien-style science-fiction horror game which takes place on a space station.

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