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For most people Microsoft's Xbox 360 is a games console. But you wouldn't know it from its most recent ad campaign.

That's because, for the first time, Xbox has centred its marketing activity on the other stuff the console can do, like stream TV shows or connect you to social networking sites.

It's this 'other stuff' that the brains behind the Xbox 360 are working hard to promote as they strive to transform the console into something that will occupy pride of place in your living room, reinventing the entertainment experience forever.

It was back in November 2005 that Microsoft unveiled the Xbox 360 to the world, sparking yet another battle in the long-running console war. While Amiga, Atari, NeoGeo and Sega have long given up the remaining contenders, Microsoft, Nintendo and Sony are still hard at it.

But in the four years since the Xbox 360's launch, something huge has happened. The usual sparring match between console-makers has of course ensued, but a more important trend has emerged: mums, dads, grandmas and granddads around the world have finally started playing video games, ushering in the age of the 'casual gamer'.

It's an incredible achievement to engage generations of people, many of whom would previously have never felt any desire to play video games. In just a few short years the rise of casual gaming has propelled Nintendo into a market-leading position, with the Wii selling around 20 million more consoles than either of its rivals (see box).

No wonder then that Microsoft wants a slice of the action. Xbox 360s have sold well, but nowhere near as well as Nintendo's Wii. This is where David Gosen comes in. A former managing director of Nintendo Europe, Gosen now heads up Xbox's marketing efforts across Europe. He is understandably complimentary about his old employer, but he reckons he can do even bigger things at Microsoft.

"Nintendo has done a tremendous job in showing how the market can grow," says Gosen. "The challenge for us is to ensure our consoles aren't just gimmicks. We're not interested in something people play once and then just stick in a cupboard. We're looking at building sustainable entertainment."

No-hands gaming

Sustainable entertainment, most people would agree, doesn't sound all that entertaining. But Gosen, fresh from a meeting with 400 Xbox developers, is underplaying Xbox's trump card - one he has only just received licence to talk about.

The trump card is Project Natal and the developers Gosen has just addressed are all working on this top-secret launch that could change the perception of the Xbox from a console for hardcore gamers to something much more accessible, like the Wii, which anyone can simply pick up and begin playing almost instantly.

Perhaps if an occasion arose when someone stood up and started waving their hands about manically in your living room, it's likely that a discreet phone call would be made to social services and the perpetrator carted off to a big grey building never to be heard of again.

But soon, if Gosen's plans come to fruition, gamers will finally be liberated from their controllers and set free to explore motion-sensitive gaming.

The central premise of Project Natal involves a new way of playing games. Two cameras and some smart technology mean the Project Natal add-on to the Xbox 360 can measure the movements of every joint in the human body, scan the depth of the room and judge a player's movements based on these factors. This eliminates the need for controllers, allowing players to immerse themselves in the gaming experience in a way not even possible with the Wii.

Be warned though, if in all the excitement you accidentally spill your drink down your top, Natal will be able to tell, even if it will be too polite to say so.

"This is a pivotal moment that will carry with it a wave of change, the ripples of which will reach far beyond video games," said Steven Spielberg recently when news of Project Natal reached Hollywood.

Microsoft products are not normally met with such enthusiasm, and certainly not from famous movie directors. No one expressed such excitement about Microsoft's Zune, Windows Vista or even Bing. Surely then the level of anticipation surrounding Project Natal means that at long last Microsoft is on the verge of something very big indeed.

Mass market

There's no doubt that Project Natal has huge potential, but on the face of it Xbox still appears to be catering for its core audience of hardcore gamers. Browsing through the top-selling Xbox 360 games, it's difficult to envisage (although there are doubtless exceptions) many mums, dads or grannies playing Gears of War 2, Halo 3 or Call of Duty 4.

This is where Gosen's marketing expertise is required. Hardcore gamers will happily shell out £200 for an Xbox and £40 for a decent role-playing game or first-person shoot-'em-up, but the average consumer takes a little more persuasion to put their hand in their pocket.

Truth be told, the majority of hardcore games aren't all that excited about Project Natal. By and large they appear content to continue putting in the countless hours needed to work out how best to manipulate the 14 buttons on an Xbox 360 controller. And as long as there are games created that need complex multi-button combos they'll remain happy. But Project Natal isn't intended to appeal to hardcore gamers.

"We are planning to shift from the core gamer to a mass-market audience," says Gosen. "To broaden our appeal we have to move beyond games into entertainment experiences. We know we have an opportunity to be the entertainment hub in the living room. What you're seeing from us in Project Natal is the start. The trend is moving towards entertainment rather than true games."

Owning the living room

Entertainment is what people like in Britain. Big, flashy, sometimes crass entertainment on TVs in living rooms. X-Factor, Strictly Come Dancing, Britain's Got Talent - get some ascerbic judges, mediocre contestants and sparkly decor and you're on to a winner.

Now imagine a Saturday night five years from now when the whole of Britain is glued to what's on Xbox rather than simply on the box. Where families play a game together live online with others instead of watching Simon Cowell make another wannabe pop star cry live on ITV. It may sound unrealistic, but it's already happening, albeit more in the US than the UK for now.

Xbox's ambition of being the entertainment hub of the modern living room is best displayed in its quiz show 1 versus 100. This is a scheduled show which contestants can take part in by turning up on a Saturday evening with their Xbox Live avatar to answer a bunch of questions.

As well as catering to the MMOG (massive multi-player online game) crowd, 1 versus 100 represents the best example yet of how a games console can own the living room on a Saturday night.

And once people of all ages start buying consoles, Xbox will be able to wrap its marketing around these big flashy events. But Gosen has a job to do first.

Something for everyone

"If I can stand next to a friend in the pub on a Friday night and say, 'did you know you can watch Premier League football on Xbox with no dish and no long-term contract', and he says no, that's when I've hooked him," says Gosen.

"It's relevant, interesting and compelling. I'm not going to close that sale in the pub on a Friday night so what we have to do is have conversations with audiences all year round. We need to talk Premier League to a certain audience, movies to another audience and Facebook and Twitter to yet another one."

Soon Gosen will have more other stuff to impress his mates with down the pub. Microsoft is in negotiations with the BBC, Channel 4 and several other content providers to make their video-on-demand services available via Xbox Live. Sky Player is already available and, as a man who used to work at the satellite broadcaster, Gosen is perfectly placed to challenge the TV as the main entertainment hub in the living room.

"This is very similar to when I launched Sky Digital in the UK with Premier League football," he says. "Premier League was used as the hook, then movies were brought in. With Xbox, it's a similar situation as it involves growing mass appeal from a core audience. That's what Facebook, Twitter and Zune are going to do for us. By the end of this year UK consumers can play games they love to play, they can watch movies and Sky, they can connect their social circle through Facebook and Twitter and they can share content."

It's all very different to what Nintendo is up to. Microsoft admits that it considered creating a motion-sensitive controller, similar to the Wii's, but felt it would be an interim measure. Instead, with Project Natal, it is set to go one step further with no controller at all. And, importantly, while the Wii offers games, Microsoft is able to offer a whole lot more.

Sony is developing a similar controller for the PS3, but Project Natal has been running for almost two years now and could launch as early as next year, giving Microsoft a big head start on its competitor.

"Play, watch, connect and share" is what Gosen wants people to do with their Xbox, but first he has to create some contagious marketing that redefines how people think when they see the games console.

"It's not going to change overnight," he says. "It will take time but what we have to make sure is that we have the quality content. Ultimately it's immense fun and we don't talk about fun enough. That's what will bring people into Xbox and that's what will make it relevant because what we're saying is that you don't need to learn anything."

Microsoft claims to capture another Xbox Live subscriber every five seconds, and once other generations get involved the potential for the Xbox to be the entertainment hub could become a reality.

This Christmas it's likely that the Nintendo Wii will remain the console of choice, but, if Gosen's plans come together and developers work fast enough, 2010 could be the real breakthrough year for Xbox, and Saturday night TV favourites such as The X-Factor might become a thing of the past.

PS3

Consoles sold: 27 million (as of October 2009)

Spec

• Wireless 11-button controller with vibrate function
• 80 gigabytes of storage with two USB drives
• Plays Blu-ray, DVDs and games from its predecessors
• Stores music collections, videos and photos

Web features

• The PlayStation Network allows you to chat via text and voice, join multi-player games and surf the web from the built-in browser.

In development

• Sony could introduce third-party non-gaming content to PlayStation Network next year through an app store that is rumoured to be in development.

Top five selling games

1. Metal Gear Solid 4: Guns of the Patriots - 4.5m
2. Gran Turismo 5 Prologue - 3.9m
3. MotorStorm - 3.3m
4. Grand Theft Auto IV - 2.7m
5. Uncharted: Drake's Fortune - 2.6m

XBOX 360

Consoles sold: 31.2 million (as of January 2009)

Spec

• 14-button wireless controller
• 250 gigabytes of memory and two USB ports
• Plays DVDs and stores multimedia files

Web features

• Xbox Live has 20 million members and the community is thirsty for more content. More than two million people have already used Facebook through the Xbox following their recent partnership.

In development

• Project Natal, which features controller-free gaming, could launch next year while rumoured media partnerships with the likes of the BBC and Channel 4 could come to fruition.

Top five selling games

1. Halo 3 - 8.1m
2. Gears of War - 5m
3. Gears of War 2 - 5m
4. Grand Theft Auto IV - 4m
5. Call of Duty 4: Modern Warfare - 3.7m

Wii

Consoles sold: 50.4 million (as of March 2009)

Spec

• Physical nine-button Wii Remote uses wireless Bluetooth technology that hooks up to a 3D motion sensor that can be detected within 10 metres of the console.
• 512 megabytes of memory; two USB ports
• Plays Nintendo Gamecube games

Web features

• Connects wirelessly to the internet with dedicated news, weather and shopping channels providing game downloads and enabling swapping of data with other Wii players, including chat and instant messaging.

In development

• Rumours about releasing Wii games on the Apple iPhone appear wide of the mark and Nintendo is likely to stick to its unique position of being a game-playing console and nothing more.

Top five selling games

1. Wii Sports - 50.5m
2. Wii Play - 24.4m
3. Wii Fit - 22.5m
4. Mario Kart Wii - 18.4m
5. Super Smash Bros. Brawl - 8.4m