Microsoft also announced plans to launch a game streaming service on Sunday. This would mean that users could select a game online and play it immediately without the need to buy a disc or download the title. Sony currently has its own streaming service called PlayStation Now for $19.99 a month.
Harding-Rolls said the streaming service is likely "a few years away from launch." But Microsoft's strength in cloud computing should put it in a good position.
"A number of publishers are showing renewed interest in cloud gaming and subscription business models. As the market shifts, Microsoft is strongly positioned due to its Azure capability," Harding-Rolls said.
As the life cycle of a console continues to increase, Microsoft and Sony are relying more heavily on subscription based models. Microsoft has a $9.99 a month subscription service called Xbox Game Pass which gives users access to new games.
"We've been thrilled to see the positive impact Xbox Game Pass is having on the gaming ecosystem, including increasing the number of titles gamers play nearly 40 percent and increasing gameplay hours by almost 20 percent," Mike Nichols, chief marketing officer for gaming at Microsoft, said in a press release on Sunday.
Sony will hold its E3 press conference on Monday.