Microsoft just announced its living-room game console, the Xbox One, will be backward compatible with Xbox 360 games.

Microsoft plans to offer digital copies of Xbox 360 titles to anyone who has purchased them, but you'll still be able to play your old discs.

But there's a catch: Not all Xbox 360 games will work with the service. Microsoft said about 100 titles will be available when the feature launches "this holiday season," but during the Monday news conference, Microsoft showcased "Mass Effect," one of the most popular games from last-generation consoles, as an example of a 360 game you will be able to play on your current-gen console.

This is a huge move for Microsoft as it aims to better compete with Sony's PlayStation 4, which got a head start in this generation's console wars.