The moves mark another reversal for the software giant on the Xbox One, which is lagging Sony's PS4 in sales and faces competition from existing consoles, streaming boxes such as Apple TV and Amazon's new $99 gaming-and-entertainment device.
Microsoft has backtracked several times in marketing its gaming console. It dropped a requirement that Xbox One users maintain a constant Internet connection before the console went on sale. And it decided to allow support for used games after an outpouring of outrage from gamers last year.
On Tuesday, the company said it will now sell the Xbox One for $399, or $499 with a "Kinect" motion sensor, starting June 9. Executives had previously talked about the Kinect, which tracks hand and body movements, as integral to the device's experience.
"That's going to appeal to our fans on Xbox 360 who have been excited to try Xbox One but, because of affordability options, haven't had the opportunity," Yusuf Mehdi, Xbox vice president for strategy and marketing, said in an interview. "So we think that's going to grow the market."
Previously, only those who subscribed to its Xbox LIVE game and entertainment streaming service, which starts at $60 a year, could stream content from popular apps such as Netflix, Hulu and HBO Go.
Sales of the Xbox one console have lagged Sony's PS4 since their holiday launches. Microsoft Corp said last month it has sold over 5 million Xbox One video game consoles as of April 17. The console went on sale on Nov. 22 in 13 countries, including the United States, United Kingdom and Australia, a week before Sony's PS4 which sold more than 7 million units as of April 6.
© Thomson Reuters 2014