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The software maker, whose market-leading Xbox already streams Netflix and ESPN and other channels, has unveiled a "SmartGlass" application on that links the console to mobile devices powered by Windows or Apple's iOS and Google's Android.
The US software corporation has been trying for years to make a living-room entertainment hub of its Xbox, which has sold 67 million units since it launched in 2005. Now, the company is trying to expand the Xbox's entertainment menu and hook it up to "companion" mobile devices as a way to boost sales of its seven-year old console.
The company also announced Internet browsing will be made available on Xboxes, including through voice recognition in a nod to the popular "Siri" function on the newest iPhones. And it talked about plans to sell cloud-based music a la Apple's iTunes or Amazon.com Inc.
Wedbush Securities' Michael Pachter deemed "SmartGlass" a nice feature - especially its ability to turn devices into TV remotes - but added it wasn't clear how essential it will become.
But having Internet Explorer on Xboxes will help Microsoft compete with a new generation of "smart" or Web-enabled TVs made by Samsung and others that let viewers stream content from online services such as YouTube.
"With an open browser, it's like you have a smart TV on an Xbox, which could mean you don't go out and buy a connected TV if you already have an Xbox at home," he said.
"SmartGlass" lets users remotely control TV displays from touchscreen enabled mobile devices -- swiping, pinching and tapping just like one would on an iPhone.
It also allows viewers to see "companion content," from TV to games, on the smaller screen. For example, gamers playing Electronic Arts' "Madden NFL" on an Xbox in the same room could design plays on individual tablets without showing their opponent.
Or someone watching "Game of Thrones" on the "HBO GO" streaming service via Xbox could simultaneously browse websites about the show's cast.
Microsoft is the second company at this year's E3 in Los Angeles - the annual gathering of the industry's top executives and analysts and fans - to show off services that employ a second screen.
Nintendo's GamePad controller is used in conjunction with the company's consoles and features a screen that can display additional content and gameplay.
Microsoft also gave the audience a sneak peek at "Xbox Music," which will work on Xboxes as well as on Windows Phone and Windows 8 devices. And it drew cheers from the fanboys in the audience with new versions of its "Halo" and "Gears of War" shooter games.
For some though, the proliferation of devices may be too much.
"South Park" co-creator Trey Parker, invited onstage with partner-in-crime Matt Stone, poked fun at the concept of household connectivity.
"How many times have you watched South Park, thinking I want to play a game on my tablet, while connected to my oven sitting in a fridge?" he quipped as Microsoft executives looked on.