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Microsoft has announced that the Xbox One will be getting backwards compatibility with "hundreds" of Xbox 360 games, coming in the fall.

The surprise announcement comes as Microsoft's Xbox One is engaged in a bitter fight with the PS4 to be the most popular game console in the current video game generation. With previous statistics showing many Xbox 360 users jumping ship to the PS4, Microsoft's decision to allow hundreds of the most popular Xbox 360 games to be played on the Xbox One seems like a sound strategy to stop this trend.

As for how it works, Microsoft engineers have actually built a full Xbox 360 emulator using the Xbox One architecture, allowing Xbox One gamers to launch 360 games via the emulated Xbox 360 dashboard. This way, existing Xbox One features such as game streaming, DVR and screenshots will still work with Xbox 360 games.

360 features, like achivements and multiplayer, will be supported, and game saves can be carried over for existing 360 owners. Digitally purchased games will also be supported.

Xbox Preview members already have access to the backwards compatiblity beta testing program to test out this feature, but most users will have to wait until the fall when 100 of the most popular Xbox 360 titles will be made compatible. Microsoft says that "hundreds more" will be added every month.

Microsoft's move has surprised almost everyone, least of all Sony. "I didn't think it was possible. There must be lots of engineering effort," says Sony’s Worldwide Studios boss Shuhei Yoshida. "It was surprising," says Yoshida.

When asked if Sony have similar plans to add PS3 backwards compatibility to the PS4, Yoshida refused to rule it out, but says that the PS3's "unique architecture" presents a tougher technical challenge. "PS3 is such a unique architecture, and some games made use of SPUs very well," says Yoshida. "It's going to be super challenging to do so. I never say never, but we have no plans."