Halo 2 is not due to be out until 2004

Microsoft is trying to widen the appeal of its Xbox, unveiling a range of games designed to appeal to hardcore gamers and attract younger players to the console.

At a new conference to kick off the gaming industry's annual trade show in Los Angeles, the software giant showed a preview of the follow-up to the best-selling Halo game and announced upgrades to its online gaming service.

But there was no announcement of a Xbox price cut as had been rumoured, or of a redesigned, slim line console.

The news from Los Angeles was marred by figures from Microsoft showing that the division responsible for the Xbox lost nearly twice as much in the most recent quarter than it had a year earlier.

Games onslaught

The Electronic Entertainment Expo in Los Angeles, known as E3, is the main showcase for an industry which is expected to generate $30bn in sales this year.

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In its bid to grab a slice of this market, Microsoft is aiming to attract more players to its console by developing games with a wider appeal and building up the Xbox as a digital entertainment centre.

Microsoft has sold about 10 million consoles since the launch in late 2001, putting it ahead of Nintendo's GameCube in the US and Europe. But it is still languishing behind Sony's PlayStation 2, which has sold more than 50 million units.

At its news conference, the company unveiled the line-up of games planned for the year, showing a preview of Halo 2, the eagerly awaited sequel to the sci-fi first-person shooter.

The titles include several designed for younger players developed by the British games publisher Rare, such as Grabbed by the Ghoulies.

Microsoft bought Rare last year to improve the range of exclusive Xbox games, which are key to the company's strategy for selling hardware and ultimately turning a profit on the Xbox.

"Our vision is to expand the definition of video game entertainment by expanding gaming content and merging it with services that will build the gaming community," said Robbie Bach, Chief Xbox Officer at Microsoft.

Connected lifestyle

Microsoft says it has an advantage over Sony in online gaming as Xbox Live uses a central broadband server for its 500,000 subscribers.

The Music Mixer turns the Xbox into a karaoke machine

It announced several new Xbox Live functions, including an online voice-based chat room and a feature that can alert and invite other players to join in online contests.

There were also further moves towards turning the Xbox into a digital entertainment centre.

Microsoft announced a program called Music Mixer which will allow people to move music from the PC to the Xbox and use the console as a karaoke machine.

"The convergence of content and services is being embraced by people whose lifestyle is all about being connected. Serving this lifestyle, and the gamers who are part of it, is absolutely required for success," said Mr Bach.

But there was no mention of a fall in the price of the Xbox as some had expected.

"We're very comfortable with the way things are selling," said Mr Bach.

Xbox sales have risen in recent months, but the company is still losing money over the console.

The latest figures from Microsoft showed that losses at its Home and Entertainment division, which is responsible for the Xbox, lost $190m in the most recent quarter compared with a loss of $97m a year earlier.