The computer and video games industry has poured billions into innovation over the last decade, particularly since it became a new front in the battle for the home between giants like Sony and Microsoft.

They used their Playstation and Xbox platforms to experiment with rival high-definition video systems; Sony's Blu-ray won that battle.

At this week's E3 event in Los Angeles, both companies are unveiling innovative ways of interacting with their consoles. In that mission, they are trying to steal a march on Nintendo which proved with the Wii that new ways of playing games could be just as important as fancy graphics.

Microsoft last night unveiled the results of Project Natal, the hefty research project which promised to turn the bodies of game players into human console controllers.

It will now be known as Kinect, and is scheduled to hit the shops in November, just in time to give the video games industry a much-needed boost in pretty hard times.

The launch had lashings of Hollywood razzmatazz, with a bevy of stars parading along a red carpet into a performance by Cirque du Soleil. For some reason I still can't quite understand, I found myself interviewing Jack Osborne about the future of gaming.

Anyway, down to business. The system centres on a sensor which you place above or below your TV - it has three cameras plus voice recognition built in, so it knows an awful lot about who you are, how far away you're standing and how you are moving.

We filmed Kinect just before the celebs flooded in to have their go, and I got a chance to play a couple of games. One involved steering a dinghy down through the rapids, another was a hurdle race, one of a series of sports games.

It was an enjoyable, if sweaty, half-hour, and I could certainly see the attractions of throwing away the control and just flinging yourself at the game.

But I was not quite convinced that Microsoft's technology would deliver for hard-core gamers. It seemed to work well on fun Wii-like games where you didn't need too much precision - I'm not so sure how whether it would deliver on a first-person shooter.

I've also had a go on Sony's Move motion control system, which is unveiled on Tuesday. Sony's solution is much less radical. It has retained the controller, now adorned with glowing spheres which interact with a sensor unit on the television.

This makes the whole experience less physical than with Kinect, but it also delivers a lot more precision. Sony showed us a table tennis game which seemed to mimic the real thing much more closely than I have seen elsewhere.

But everyone in the games industry, and particularly the developers, is hoping that these innovations get gamers excited enough to start spending money again.

They might prefer to see new consoles; failing that, an accessory which obliges the customer to get some new games may just do the trick.

"You're coming of age in a 24/7 media environment that bombards us with all kinds of content and exposes us to all kinds of arguments, some of which don't always rank that high on the truth meter. And with iPods and iPads, and Xboxes and PlayStations - none of which I know how to work - information becomes a distraction, a diversion, a form of entertainment, rather than a tool of empowerment, rather than the means of emancipation. So all of this is not only putting pressure on you; it's putting new pressure on our country and on our democracy."

In Europe, there will be a drop of 80 Euros on the 20 gigabyte hard drive model, bringing it down to 270 Euros.

In the UK the price cut is £40 (which is equivalent to about 52 Euros). However, this brings the price down to £149.99 (about 196 Euros), which actually makes it cheaper in the UK than in the rest of Europe. (Is that a first?)

So how does this place the Xbox in the console wars?
It means that it is now cheaper than the Sony PlayStation 3, and the Nintendo Wii.

Top-level Xbox models are also cheaper; The Xbox 360 Elite with a 120Gb hard drive will be £259.99, compared with Sony’s 40Gb console which retails at £299.99. The Nintendo Wii is priced at £180.