The launch of a cheaper Xbox One and a strong show of content at E3, one of biggest video game trade fairs, has allowed Microsoft to improve Xbox One sales and "claw back some market share in recent weeks", Piers Harding-Rolls, head of games at IHS, told CNBC in an email.
"Microsoft's move to secure 'Rise of The Tomb Raider' exclusivity at the end of 2015 is a strategic coup. The title is well-anticipated and loved, and will allow Microsoft to go head-to-head with 'Uncharted 4', Sony's biggest third-person action exclusive, expected to launch in the same timeframe"
PS4 throws punches
Not to be outdone, Sony announced a slew of new games and features as gamemakers attempt to make consoles an entertainment platform for films, TV and music.
Read MoreIs it game over for Nintendo?
But the most advanced revelation could be the PS4 system update 2.0 which will allow friends to play a game even if they don't own it.
"The best way to think about Share Play is like a 'virtual couch'," Sony said in its official PlayStation blog.
"PlayStation 4 will create an online local co-op experience by allowing you to invite a friend to join your game—even when they don't own a copy of it."
It will also allow players to upload game footage to YouTube, a growing trend amongst users wanting to show off their gaming accomplishments.
Who will win?
The game is hardly over for Microsoft as the important Christmas period approaches fast. While Sony has the edge, a cheaper offering from Xbox and the new announcements at Gamescom, could make for an interesting clash, according to Harding-Rolls.
"The console business is a momentum business and the sales momentum continues to be with Sony and PS4 even with a better positioned Xbox One. That said, I believe that Christmas 2014 will be highly competitive between the two consoles," Harding-Rolls said.
- By CNBC's Arjun Kharpal