While Microsoft and its game-making partners made plenty of announcements at the software giant’s E3 press conference this morning in Los Angeles, one is truly a blockbuster: this year, Xbox One gamers will be able to “natively” install and play a growing collection of their Xbox 360 games for free.

When the Xbox One first launched, this was a major source of contention: here was Microsoft, asking its best gamer customers to cough up another $500 on a powerful new console that couldn’t even play their years-old libraries of Xbox 360. Since that launch, many have speculated that Microsoft would bring Xbox 360 game compatibility to Xbox One via some sort of OnLive-like cloud-power service. But the software giant’s announcement today suggests that’s not the case at all.

Instead, Xbox 360 games will run “natively” on the Xbox One. Not all Xbox 360 games, however, but rather over 100 games initially and more over time. What that means is unclear, but the answer lies most likely in the Xbox One’s Windows 8-based architecture, which uses a modified version of the Hyper-V virtualization software.

There are many other questions, of course. We’re not sure about the exact list of games that will work, for example. I’m wondering if this requires Xbox Live Gold. And while Xbox 360 games purchased digitally will just start appearing in your games collection on the Xbox One, it’s not clear what happens with your disc-based games. (I would imagine you need the disc in the drive for this to work.)

One thing we do know is that Xbox One Kinect voice features like “Xbox, record that” and “Xbox, take a screenshot” will work just fine with Xbox 360 games. That’s pretty sweet. And if you’re an Xbox One preview member, you’ll be able to get started with Xbox 360 games on your Xbox One today. The general public will see this feature turned on by the holidays.

This one still qualifies as “fog of war” since the Microsoft/Xbox news sites are down and it’s not entirely clear how this will all work. But this looks like it’s going to be very good news indeed. More soon.

Update: A few more details…

First, here is a video of the Xbox 360 game compatibility on Xbox One segment of Microsoft’s E3 presentation.

Second, here is what a FAQ on the Xbox web site adds about this functionality:

“Xbox One Backward Compatibility is an Xbox 360 emulator that runs on Xbox One and is used to play Xbox 360 games. We call it backward compatibility because gamers can play select Xbox 360 games on the Xbox One. However, referring to this functionality as an emulator is more accurate from a technology perspective since the Xbox One is not technically reading and playing the 360 game off of a disc.”

UPDATE 2: Here are the first Xbox 360 games that will work on Xbox One:

A Kingdom for Keflings

A World of Keflings

Alien Hominid

Banjo Kazooie: Nuts n Bolts

Banjo-Kazooie

Banjo-Tooie

BattleBlock Theater

Defense Grid

Geometry Wars Evolved

Hexic HD

Jetpac Refuelled

Kameo

Mass Effect

Perfect Dark

Perfect Dark Zero

Small Arms

Super Meat Boy

Toy Soldiers

Toy Soldiers: Cold War

Viva Piñata

Viva Piñata: Trouble in Paradise

Tagged with Xbox 360