Microsoft announced at E3 that it is working on a game streaming service that will let users play games at console quality on any device.
The company is also developing the architecture for the next Xbox consoles, said the executive president of gaming at Microsoft, Phil Spencer.
Its announcement comes on the heels of a similar announcement from game publisher Electronic Arts, which runs the online PC game marketplace Origin.
EA was demonstrating its “cloud gaming” system at E3.
Microsoft and E3 are entering a hotly-contested space with companies like Sony, GameFly, and Shadow – which offer cloud gaming services at a variety of prices.
Graphics hardware giant Nvidia is also testing its cloud gaming platform, GeForce Now.