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Microsoft announces the news at E3 this morning.

Microsoft just dropped a bomb on the game industry, announcing that the Xbox One will be able to play Xbox 360 games — making its newest console backward-compatible with titles originally created for its previous generation of console hardware.

Xbox chief Phil Spencer
Xbox chief Phil Spencer

Xbox chief Phil Spencer announced the news moments ago to huge cheers at the E3 video game convention.

“Your Xbox 360 games, the games you’ve invested your time and money in, and the games you want to continue to play, will be playable natively on your Xbox One,” he said. “Our goal is to deliver the largest games catalog ever on Xbox, and Xbox One backward compatibility allows us to do just that.”

The move could give the Xbox One a major boost, removing a significant hurdle for Xbox 360 owners who were reluctant to give up their older games. Microsoft’s Xbox One has so far lagged Sony’s PlayStation 4 in global console sales.

More than 100 titles will be available for backward-compatibility this holiday, with hundreds more available after that, the company says. Digital Xbox 360 titles will show up automatically in players’ Xbox One game libraries. Gamers will also be able to insert an existing Xbox 360 retail disc to download a copy of the game for Xbox One.

“The game runs exactly like it does on Xbox 360, but better thanks to the power of Xbox Live,” said Xbox engineering executive Mike Ybarra, demonstrating the backward compatibility on stage. Gamers will be able to play titles on Xbox Live with their friends on Xbox 360, and also take advantage of Xbox One features such as screenshots.

“With Xbox One backward compatibility, we won’t charge you to play the games you already own,” Ybarra said.

It’s available starting today for Xbox preview members before a wider rollout this holiday.

Update: Here’s the official Xbox page on the backward-compatibility feature, including a list of titles that will be backward-compatible when the feature launches.

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