The future of Xbox: why Microsoft hasn't abandoned the core

Here are some things that have happened in the past two years. Kinect has sold well over 18 million units worldwide, handily eclipsing the PlayStation Move and taking the baton from the Wiimote as the market's best-known motion-sensitive peripheral. Xbox Live has expanded beyond downloadable games and online multiplayer, driving a threefold increase in video consumption via partnerships with the BBC, Channel 4 and Sky among other elderly champions of living room recreation.

The word "Xbox" itself is evolving into an umbrella term closely tied to the impending Windows 8 operating system, a catch-all super-brand for Microsoft's entertainment offerings at large. Free-to-play is being touted as the business model to watch while boxed sales slump, and a new threshold in media convergence has been achieved thanks to Xbox SmartGlass, out this very week, which promises to augment what you experience on your telly by streaming appropriate data to the phone or tablet in your lap.

These are dark times, we're told, for the traditional games connoisseur, the core enthusiast "abandoned" in the headlong rush to "expand markets" and "broaden audiences". But then again, here are some other things that have happened in the past two years. Microsoft has announced not one, not two, but three new Halo games alongside the industry's first heavyweight episodic FPS. Activision has signed up Bungie to develop an Xbox exclusive sci-fi franchise of comparable immensity, the mysterious Destiny project. Developers have continued to experiment with "hardcore" gaming on Kinect, despite punishing setbacks.

A golden age of ingenuity and quality has dawned on Xbox Live Arcade, thanks to intelligent, original, well-produced titles like Fez, The Walking Dead, Mark of the Ninja and Awesomenauts. Call of Duty and FIFA are still breaking records and vexing the enemies of iterative thinking. Dishonored, Skyrim, Mass Effect 3, Borderlands 2 and Forza Horizon have demonstrated that there's plenty of juice left in AAA, and games like Dark Souls, Dragon's Dogma and Binary Domain have proven that the second tier isn't without its charms either. Gaming's heart of hearts, in short, has continued to beat.

Some have insisted, and continue to insist in the face of recent developments, that the creative and commercial trajectories represented by the paragraphs above are mutually exclusive. That there's no way the Xbox brand can cuddle up to the proverbial Eastenders-watching granny and the wired 14-year-old Battlefield pro without sparking some sort of explosive reaction, like mixing potassium and water.

The evidence against this baffling line of thought is all around us, but it's encapsulated in the latest Xbox 360 dashboard update. In concert with SmartGlass, the Spotify-esque Xbox Music service attests to the intensity of Microsoft's desire to wrest customers from Apple. But other tweaks and adjustments show that the manufacturer is listening to the gaming audience too, as it expands and refreshes the venerable Xbox Live service. The Games slot is back in the centre, and the much-prized albeit spotty Indie category has been plucked from the depths to which last year's update consigned it.

It's always worth questioning big, publicly traded corporations, caught between the not-entirely reconcilable demands of consumers and shareholders, and Microsoft has much to prove over the next few years - with SmartGlass, with Xbox Live's new direction, with free-to-play and with the next generation of console hardware. But the purists who decry the "diluting effect" of an expanded commercial remit need to wake up and smell the macaroni. The games industry has never offered an array of experiences as rich and intelligent as today, and for all the furore over Xbox's movement into new territories, the best is probably yet to come.