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What to expect from Microsoft's Xbox One press conference

Microsoft will kick off the year's biggest video-game conference at 9:30 a.m. PT Monday. Here's what to watch for.

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Microsoft kicks off E3's busiest day with an Xbox press conference on Monday. Josh Miller/CNET

Microsoft's super-soldier Master Chief, from the venerable Halo game series, will have a busy schedule on Monday.

That's because the software company and video game console maker will kick off Electronic Entertainment Expo, the game industry's largest annual trade show, with a 9:30 a.m. PT press conference dedicated to Xbox. The company will devote much of the show to Halo 5: Guardians, one of the most anticipated games of the year. It launches in October.

E3 serves as one of the best opportunities for Microsoft to grab gamers' attention for the next Halo game, as well as set the tone for its Xbox One game console. The Xbox One has finally found its footing with consumers over the last year thanks to aggressive price cuts and a more robust game lineup. Much of that progress has been making up for time lost against the competition.

Tune in: CNET's live blog of Microsoft's E3 event at 9:30 a.m. PT Monday

Before launching the console in November 2013, Microsoft faced heavy criticism for shifting away from game playing and toward television, with a large focus on cable box integration and other media capabilities. It didn't help when the company attempted to impose new restrictions on how players connected the console to the Internet, requiring a sign-on once a day to play games, and limiting how people could lend games to a friend or sell them back to a retailer. Many of those policies were nixed leading up to the launch.

Microsoft has spent the time since rebuilding the Xbox's image under the leadership of Phil Spencer, the former head of Microsoft's in-house game production team. Spencer shifted the Xbox division back to more serious game-playing, even as he made tough decisions about the platform itself, such as making the Kinect motion camera a separate accessory. He's also been candid in outlining where the Xbox One has needed to improve -- including such as making it easier for developers to create games -- and where the company had strayed from its mission.

It's been quite the turnaround.

After Sony's PlayStation 4 handily beat the Xbox One in US retail sales for more than 12 straight months, Microsoft managed to inch ahead in December 2014 thanks to a $50 price cut that put the console at $350. That effort has paid off: Sales of Xbox hardware in May were up 81 percent from the same time a year ago, according to market researcher NPD Group.

But maintaining that momentum isn't a given. Sony remains an industry leader in promoting the best and most promising games from independent developers, like the highly anticipated No Man's Sky, a space exploration title, and the upcoming puzzle game The Witness from indie superstar Jonathan Blow. While Microsoft is expected to give more airtime on Monday to indie developers, it still lags behind Sony.

Sony has also secured high-profile deals with game makers to bring exclusive game add-ons to the PlayStation. These include special maps and weapons for the space shooter game Destiny, which Xbox owners still don't have access to. These exclusive deals remain a powerful force in the console industry, where deciding which platform to choose often boils down to which one your friends play and what platform delivers the most for your money.

Microsoft also seemed to be on the sidelines of the virtual-reality race. That changed Thursday, when it announced a surprise partnership with Facebook-owned Oculus VR that will bundle Xbox One controllers with the Oculus Rift when the headset ships next spring. Xbox One games will be also playable in a virtual home theater thanks to Windows streaming technology now being developed to bridge the PC and the Xbox platforms.

Microsoft will talk about these and other developments Monday when it gives us a snapshot of Xbox's present and future. Heading into the event, here are key themes to look out for.

Halo 5: Guardians front and center

This year's E3 marks the moment Microsoft can flaunt Halo as the biggest strength of the Xbox One platform.

The sweeping epic space opera remains the closest analog to Star Wars in the video game world. The exploits of Master Chief as he participates in intergalactic warfare still rank among the most iconic gaming experiences in the industry, alongside the likes of Nintendo's Super Mario, Electronic Arts' Madden football and Take-Two Interactive's Grand Theft Auto.

Halo 5: Guardians marks the second major Halo installment made by Microsoft's in-house studio, 343 Industries, instead of series' creator Bungie. The studio delivered a hit with Halo 4, proving it can develop successful Halo games and setting the franchise up for another trilogy of titles.

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Halo 5: Guardians, which comes out in October of this year, is expected to breathe new life into the Xbox One game console. Microsoft

Yet Halo 5 marks an especially pivotal moment for the franchise. Microsoft and 343 bear the responsibility of pushing Halo forward while remaining loyal to the game's fans. That presents a challenge given the rise of video games as online services that gamers spend months and even years playing. Whether Halo 5 can fit the mold of a modern shooter game has yet to be seen.

The title will feature a new playable protagonist named Jameson Locke -- who doubles as an Master Chief's antagonist. The title's dueling storylines have been the focus of a large-scale marketing campaign dubbed "Hunt the Truth," and Microsoft is likely to chat up the narrative's mysteries on Monday.

Other games expected to make an appearance at the press conference will be the next installment of Activision's popular Call of Duty shooter Black Ops 3, a new Forza racing game and the sequel to 2013's Tomb Raider reboot, now an Xbox One exclusive title.

Xbox One, meet Windows 10

Though its Xbox division is often thought of as separate from the rest of the software maker's business, Microsoft this year made it clear it wants to integrate its game console with the greater Windows family.

Microsoft's Windows 10 arrives on July 29 -- and Xbox One will reap the benefits of Microsoft's most powerful software. The company will install Windows 10 directly onto the game console in an over-the-air update later this fall, and an Xbox app will let players access key parts of the platform on PCs.

"Microsoft for a number of years hasn't paid attention to PC games," said Brian Blau, an analyst with research firm Gartner. That's allowed the company Valve, with its online Steam store, to step in as the go-to destination for PC gamers. Microsoft's Spencer admitted that at the Game Developers Conference in March, saying Microsoft had lost its way with the PC

A partnership between Microsoft and Facebook-owned Oculus VR will bring both the Xbox One controller and Xbox One games to the Rift virtual reality headset. James Martin/CNET

crowd.

The benefits of having Xbox One running Windows are plenty, Microsoft says. Some games will support a cross-buy feature, which will allow you to purchase a game on a PC and receive a free copy of the same title on Xbox, and vice versa. Select titles will also be updated with cross-play support, letting players on PCs engage online in multiplayer activities with gamers on Xbox One.

Because Windows 10 is designed to run on any device, Microsoft says Xbox games can be configured as so-called universal apps. That means developers will be able to create one game that can be easily tweaked to move from Xbox to PC to Windows smartphones and Surface tablets. And for the first time, Xbox One owners will be able to stream games to a PC, where players can plug in an Xbox controller.

This will prove especially interesting with the Oculus Rift VR headset, which will come equipped with the Xbox One controller. When hooked up to a PC running Windows 10, the Oculus Rift can be used to play any Xbox One game on a virtual home theater, opening up the possibility that some of Xbox One games, like Halo 5 for instance, may be optimized for VR's immersive style of play.

By offering gamers the flexibility to play games wherever they choose, Microsoft is positioning the Xbox as a wide-reaching platform for Internet services that extends to any device, all powered by its flagship Windows software.

The strategy could "potentially help shift the tide back to Microsoft," said Blau. It may not shift the tide back to its Xbox console, he added, but it could position the company to be as important in the living room as it is on the PC. "That could be really interesting."