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How Microsoft Changed the Console Wars

Updated from 11:48 a.m. to include news about Netflix and Xbox Live Gold.

NEW YORK (TheStreet) -- If Microsoft (MSFT - Get Report) was really serious about having Xbox One unseat Sony's (SNE - Get Report) PlayStation 4 as the top gaming console, it had to get serious about price and offerings. It did.

Microsoft announced Tuesday that it would lower the starting price of the Xbox One to $399, selling the console without the Kinect, the company's motion detector add-on. The company said in a video that starting June 9, the Xbox One would be available without the Kinect, opening up the unit to more gamers who don't want to pay for the device and don't need it.

In its earnings report for its fiscal third quarter, Microsoft noted that it sold 1.2 million Xbox One consoles. The company sold 2 million Xbox consoles during the quarter. Since the Xbox One launched in October, Microsoft has sold more than 4 million units but that pales in comparison to the PlayStation 4, which has shipped nearly twice that amount. The PlayStation 4 costs $399.

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This isn't the first time Microsoft has tried to drum up sales for the Xbox One. Following the release of Titanfall in March, Microsoft bundled the popular first-person shooter game along with the Xbox One, hoping to drive sales of the console.

Titanfall was developed by Respawn Entertainment and published by Electronic Arts (EA) exclusively for Microsoft.

In other Xbox-related news, Microsoft also announced users will no longer need to have an Xbox Live Gold membership to use content apps, including Netflix (NFLX), Hulu Plus, HBO Go, and others. Previously, users had to pay for Xbox Live before being able to use these apps.

Here is a video below of Microsoft's Phil Spencer and Yusuf Medhi making the Xbox One announcement.

-- Written by Chris Ciaccia in New York

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