Microsoft Unveils New Virtual-Reality Gaming Console

Microsoft Corp. is developing a new videogame console for virtual-reality and 4K resolution gaming, the company said Monday at a media event in Los Angeles ahead of the gaming industry's annual E3 conference. It also is planning a slimmer version of the Xbox One.

The new console, dubbed "Project Scorpio," is due out next year and "will be the most powerful console ever built," Phil Spencer, head of Xbox, said on stage at the Galen Center. The beefier machine will provide "true 4K gaming and premier VR experiences," he said.

The unveiling of the new console comes after Sony Corp. on Friday said it is developing a more powerful PlayStation 4. Both moves signal a marked change in gaming in which consoles are no longer released once every six or seven years.

The more frequent cadence of console releases is similar to the regular computer upgrades that PC gamers are used to for keeping up with improvements in performance and graphics. It reflects the increasingly competitive gaming landscape, as gamers gravitate toward mobile devices and take up new virtual and augmented reality technologies.

"The challenge for Microsoft and Sony is providing something commercially meaningful without fragmenting the user base," said c.

Investors have poured $1.7 billion in augmented reality, or AR, and virtual reality technology over the past 12 months, according to Digi-Capital, a mergers-and-acquisitions advisory firm. By 2020, it projects AR to generate $90 billion in revenue and VR to reach $30 billion.

Microsoft is developing HoloLens, an AR device that works with PCs. It is unclear which VR headsets will be compatible with Project Scorpio, though Facebook Inc.'s Oculus Rift could be a candidate as that device already is sold with an Xbox controller. Sony already has unveiled its PSVR headset, which is scheduled for release in October.

With the current generation of consoles, Microsoft trails Sony by a significant amount. Sony in May said it has sold more than 40 million PlayStation 4 units, outpacing all of its predecessors. Microsoft last said in fall 2014 that it had sold more than 10 million units but hasn't updated that figure since. Analysts estimate it is now around 20 million.

Nintendo Co. in April said it has sold 12.8 million Wii U consoles as of March 31. The company has said it is working on a new gaming platform code-named NX due out in 2017, stopping short of disclosing any details about the machine.

Microsoft also said Monday the slimmer Xbox One is 40% smaller and will be released in August for $299. Called Xbox One S, it features 4K resolution for enhanced gaming graphics as well as streaming video and Blu-ray discs, the company said.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

June 13, 2016 16:15 ET (20:15 GMT)

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