The Xbox One is Microsoft's contender in the battle of the eighth generation of video game consoles, facing off against Sony's PlayStation 4 and, to a lesser extent, Nintendo's Wii U. Where its older brother, the Xbox 360, placed a heavy emphasis on gaming, the Xbox One is more of an all-round entertainment unit, designed to replace your home media hub. We spent a few days with the Xbox One to see whether it's an improvement on its predecessor.

Clear some space

Surprisingly, the Xbox One bucks the miniaturisation trend by actually being bigger than the 360. It needs a fair amount of space to sit alongside your TV, as you probably won't be able to tuck it into a shelf.

You'll find everything you need for set up inside the box, including an HDMI cable – so often not included with new devices. Unlike the 360, the Xbox One doesn't have component output ports – it relies exclusively on HDMI, so you'll need to connect it to an HDMI-compatible TV. Aside from the console box itself, you'll also need space for the motion-sensing Kinect camera that now comes standard as part of the package.

Setting it up

Once you get your hands on an Xbox One, don't expect to start gaming straight away. It can take several hours to get the console up and running. First you need to connect it to the internet, and with mandatory updates and game installations, the time between turning on the console and playing your first game could be several hours. Of course, this will depend to some extent on your internet connection speed. Before you use it for the first time, the console needs to "authenticate" via a downloadable software patch, which, at several hundred megabytes, will take a sizeable bite out of your monthly data limit.

Then, once your Xbox One is updated, you still won't be able to dive head-first into the console. Unlike the Xbox 360, you can't just pop a game disc in the drive and start playing – you need to install the game onto the console first. This can take an hour or more, since some games are 30GB or even bigger. The game actually runs from the console's built-in 500GB hard drive, though the disc still needs to be in the machine for authentication (to prove you actually own the game).

The waiting game

In most cases you can start the game once a portion is ready while the rest of the game installs, but this varies between titles. For example, we could start playing Just Dance 2014 from when it was 14% installed, but Call of Duty: Ghosts needed to be 54% installed before we could launch it. This delay can be a real bugbear if you're itching to play your new games, but it can reduce load times in the long run.

Technically, you can actually use the Xbox One without an internet connection (after the mandatory update is installed), but you'll be missing out on some of the best features, including online game play and access to most of the apps. To get online with Xbox One, you'll need to buy an Xbox Live Gold subscription, which costs $10.95 a month or $79.95 for the year.

Getting around

Navigating the Xbox One menu system is fairly easy, even for somebody new to the console. The functional layout is designed to allow easy access to every feature, and the interface is relatively free of clutter and easy to work out.

If you're a Windows 8 user, the tile-based home screen of the Xbox One will seem familiar. It's broken down into three sections; Pins, Home and Store, which you can navigate with a controller, motion sensor or voice commands.

The home screen is your central hub. It keeps your current location movie, game or app active and visible in a large window, surrounded by your five most recent locations. This makes it easy to backtrack without having to dig around inside the console, but it can be a little confusing, particularly when games that can't be launched without a disk are visible.

Alongside these shortcuts are your account settings, a list of all installed apps and games, and the Snap tool. The app list is searchable, but you can't break the contents down into separate categories. As your list of apps and games grows over time, navigating this menu may become more time consuming.

Anything from movies to specific websites can be pinned to this quick-access screen, and unpinned when you no longer need them. You can also fix in place almost any app alongside the main program for quick switching with the Snap tool. If, for example, you're happily blasting away in Call of Duty and you want to check your Facebook status, you can snap the included Internet Explorer web browser app into place alongside the game. It's a great feature for multitasking. You can't run multiple apps in the background or in full-screen without using Snap though.

Using the handheld controller to navigate the menus is straightforward, but there are a few new features that won't be immediately obvious unless you're a seasoned gamer. The traditional controller Start button has been replaced with a Menu icon, which opens a hidden list of options for each app. This is where you can find useful functions like Quit, but finding this list via the Menu button is unlikely to be intuitive for most people. A clear option to close the game or even a dedicated button would have been more obvious.

Motion sensing and multimedia

Microsoft has put a lot of work into making the Kinect 2.0 motion-sensing camera better than its predecessor. In most respects they've delivered on this promise. We found it to be noticeably more accurate than the original Kinect, and also better at working in low light. In practice, however, some features work much better than others.

Although you can navigate the menus and screens using the Kinect rather than the handheld controller, swiping your hands around the screen feels a little unwieldy. Opening an app, for example, involves gradually pushing your hand towards the icon but the response isn't always accurate. The camera integrates a few genuinely useful new features though, like signing in via face recognition or purchasing content online by scanning QR codes rather than typing in a 25-digit key. Even so, we found ourselves frustrated with motion-sensing navigation and quickly returned to using the controller.

Kinect can also launch apps and activate features using voice commands, but these have a spotty success rate. Unless you speak loudly and directly as though you're training a puppy, you're unlikely to get a reaction, although when the system does respond it usually takes you to the right location. For most people, voice navigation won't replace the controller, but it's a fun addition.

Apps and media

Games aside, sometimes you just want to sit back and watch a movie or listen to music. The Xbox One is trying to be a media hub as much as a games console and there are plenty of general non-game entertainment apps and media tools to support this. An online download and rental service is available along with traditional DVD and Blu-ray (minus 3D) capabilities and streaming music/video services. Unexpectedly, the free software required for Blu-ray and DVD playback isn't installed by default, so you need to install it from the app store.

Possibly one of the most useful additions to the Xbox One is Skype for voice and video calling, which makes good use of the Kinect camera. We found the picture and sound quality to be clear and the camera's movement detection accommodates additional people who walk into the frame by automatically zooming out. The wide field of view can comfortably show three people.

Most of these media apps require an Xbox Live Gold subscription to access, and there can also be extra costs for premium features.

TV or not TV?

Two of the most highly publicised additions to the Xbox are TV capability and OneGuide, which operates as a TV guide within the console. Unfortunately it's a bit of a moot point for Australians, as our electronic program guide (EPG) isn't included. This restricts OneGuide to simply listing new content for entertainment apps. However, if you have pay TV, a set-top box or TiVo, you can connect these into the console via the HDMI input and switch over to them using the Xbox One controller.

SBS and Channel Ten already have Xbox One apps for catch-up TV, but the popular ABC iView isn't yet represented. These apps work as expected, but their compatibility with OneGuide is inconsistent. Some list upcoming content while others can't provide any information, and some don't appear in the list at all. Some of the best digital TV services, like Netflix, are still unavailable in Australia.

Game play

As expected, the Xbox One is at least several times more powerful than its predecessor. Games display a higher degree of detail, with smoother graphics and extra onscreen action.

You can also now record up to five minutes of in-game footage while you're playing, or even broadcast your gameplay live using the online service called Twitch. We recorded a few clips and found them to be of good quality, without slowing down the console or hindering our game experience. Recorded footage can be edited using the free Upload Editor app from the app store, then uploaded for other Xbox One users to view.

Although 500GB may sound like a lot of storage space, for most gamers the inbuilt hard drive will fill up quickly given the amount of space required to install games and record clips. Sadly, there's no way to see how much space is left on the drive, which seems to be a major oversight. You can view how much space each individual game is taking up, but this is a far cry from a disc management feature similar to what was included on the Xbox 360.

Online purchasing and parental controls  

Parents will be pleased to learn the Xbox One comes with comprehensive privacy controls that you can pre-set to filter out explicit content and block online purchases. There are three default privacy settings – child, teen and adult – or custom settings that let you determine privacy controls in specific areas of the console.

Activating a password to protect these settings is optional, but we recommend it. You will be asked to enter the code before buying online or changing any privacy settings. Note that if you choose to enter your credit card details, they will be permanently stored on the console.

CHOICE verdict

If you or members of your family are hardcore gamers, you'll likely want an Xbox One. Top-line games look and perform better than on the Xbox 360. The ability to record and share in-game footage online is a welcome bonus for serious gamers, and there are enough games available for casual players as well, particularly those looking for an all-round living room media box.

The Xbox One costs $599 and delivers on most of its promises and really feels like a step up in how we interact with video games consoles. But although the motion sensing has improved, it still has a way to go before it becomes the default method of control.