Microsoft Corp said on Monday its new Xbox One console would launch in November at $499 in the United States, higher than most gamers had expected.
The price is greater than its current console, the Xbox 360, but it includes a Kinect motion sensor for hands-free game playing.
Microsoft announced the Xbox One in May as the latest move in its rivalry with Nintendo Co Ltd and Sony Corp in the $65 billion a year video game business.
At a glitzy event at the Electronic Entertainment Expo (E3) in Los Angeles, Microsoft said the console will be sold in 21 countries, including the United Kingdom at 429 pounds.
The announcement of the pricing was met with some groans from the audience, mostly hard-core gaming enthusiasts, who had hoped for a cheaper price tag.
The 8 gigabyte Xbox One is priced higher than Nintendo's new Wii U 8GB model at $300. Sony may detail pricing of its new PlayStation 4 at a presentation at E3 later on Monday.
Microsoft also announced exclusive game titles coming to the new console, including an Xbox edition of 'Minecraft' and a new 'Halo' game, which will be released in 2014.
Yusuf Mehdi, an executive at Microsoft's interactive entertainment unit, did not set any sales targets for the new Xbox, even though its existing console is currently the best selling in the United States market.