It's somewhat strange that, in just three years, what were described as the "next generation" are now considered standard and commonplace, while a new generation of games consoles is already starting to emerge.

Next year we will get Microsoft's new jewel in the crown, the Project Scorpio, with its 4K gaming and uber-powerful innards. Sony too plans to shake up its console line-up with the PlayStation Neo, also thought to be a 4K machine.

The Xbox One S is neither of those, but it is an evolutionary step towards them. It bridges the gap between the old and the new, and while it is hard to make a case for an upgrade for existing Xbox One owners, it has become the best console on the market on the build up to Christmas 2016.

Coming in three flavours, 500GB, 1TB and 2TB, which relate to the amount of storage on offer, the Xbox One S (or just "Xbox One" as it says on the box) is an excellent console that also echoes statements made by the manufacturer before the original launched. It is a bone fide, all-in-one media machine, and we feel that is its attractive selling point.

Not only does it game as well as, and slightly better than, the current Xbox One, it has a HDMI 2.0 output with HDCP 2.2 copy protection support. And thanks to upgraded processing and graphics chips, it is capable of playing native 4K video.

That includes 4K Ultra-HD Blu-ray playback. Some might not care about that, especially those in the gaming sector who don't have plans to upgrade their TVs until next year, but for the AV industry that's a big deal. Not least because the Xbox One S has hit the market as the cheapest 4K Blu-ray deck out there.

A 500GB Xbox One S will cost just £249 when it comes later this year. The 1TB model will be just £299. We review the 2TB version, at £349.99, and even that is on a par with Samsung's current UHD spinner, which is remarkable when you consider everything else it does.

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It's also a pretty beast. The new, white box is approximately 40 per cent smaller than the standard model – a remarkable feat considering the power supply is now inside the unit. Gone is the enormous power brick. You just get a figure of eight lead in the box (along with an HDMI cable), making for a much simpler solution.

The new version can be sat upright too, with a stand included with the 2TB version (it's only an optional extra for the others). It looks neat but we're AV cabinet kind of people so are happy to report that it tucks away nicely too.

The drive tray is more elegant than before, with a tiny white-on-white disc eject button almost hidden away. And the power button this time around is a physical clicker rather than touch.

There are three USB 3.0 ports on the console and one of them is now tucked away on the front of the box, rather than the side. This makes it much easier to access when in a cabinet, for example. The gamepad pairing button has also made its way around the front.

An IR blaster has appeared on the machine, so you can have it control other consumer electronics devices without having to use HDMI CEC connectivity. However, we still find that to be a simpler option and more consistent.

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On the rear, there is a full line-up of connections with one glaring omission. You get two HDMI ports, one to input TV video, one output. There are the additional USB 3.0 ports, an IR output if you want to add an external IR blaster instead of use the front-facing integrated one, optical audio and Ethernet ports too. However, there is no socket for an external Kinect, which shows that Microsoft is finally acknowledging that it didn't take off.

We actually find the latter's absence to be annoying. Like many, we suspect, we use the Kinect on a daily basis – not for motion gaming or controls, but as a microphone for voice commands. These days that's through Cortana, but we find it handy to change a TV channel or even just switch the box on and off. The only other way you can bark at your Xbox is through a mic-enabled headset, and we're hardly likely to do that regularly.

Luckily, for those, like us, that upgrade from a standard Xbox, Microsoft is offering free Kinect adapters. The device will still take up one of your USB ports, which is not ideal, but at least you don't have to chuck it away or cough up extra wedge.

There are plenty of gamers who don't really care, of course, and will happily live with, even favour, a Kinect-free device.

Microsoft has slightly redesigned its controller too. The new model is a little sleeker and sexier. It feels similar in the hand to the tried and tested Xbox One Wireless Controllers, but has grippier surface than the one that came with the original.

It also adds Bluetooth support, although only for Windows 10 devices with the latest Xbox apps, and greater distance for a stable wireless connection.

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You get one in the box and another can be bought for around £50. You can also use the older, existing Xbox One controllers, just by pairing them via the button on the front of the console, which is great news for hardcore players with expensive Elite Controllers, who don't want to switch.

Setting up the box is easy but a bit slow considering you need to perform a day one update before you start. That could take quite a while if you have slow broadband. Even with a 200Mbps connection it took us around 15 minutes to complete (including installation time). However, once it's done and you've signed into your Microsoft account, you'll soon find everything else to be swift. Very swift indeed.

As well as improved resolution – the Xbox One S will upscale all non-4K video to 2160p if you have a compatible UHD TV – the new processing chip ensures that the menu systems run faster and smoother. Apps and games also seem to get to their loading screens more quickly although we're not sure the actual loading process is any different to before.

Still, by speeding up the general accessibility of the dashboard experience, Microsoft has made it more friendly and less frustrating.

The dashboard itself can be described similarly these days. There is plenty tucked in every nook and cranny for the communal gamer but it's clean and well presented. There are plenty of customisation options to get to in time, but from the off your games and apps can be accessed immediately from the front page, and it is quick to get to downloadable content in the store.

Like with the original, you can also plug through a Virgin Media or Sky set-top-box (although not Sky Q as yet). When you do so, you can use the Xbox One S to control channel selection and get a richly detailed OneGuide presentation of all the current and future programming. We're not yet sure if the loop-through is 4K capable as there's nothing to feed it in that respect, but we'll find out in time – especially if Sky makes the Sky Q Silver box compatible in the near future.

What is 4K enabled from the off is Netflix. If you have a top level Netflix account, you can now watch Ultra HD streams through the Xbox One S. The latest app puts 4K content front-and-centre in your recommendations if you subscribe to the Premium service, for £8.99 a month, you get the 4K series and movies at the top of the home page. These are mainly Netflix Originals, including the new, excellent Stranger Things, but we suspect more will pop up in time.

As we've previously mentioned, you can also play 4K Ultra HD Blu-rays on the Xbox One S. Pop one into the front slot for the first time and it will prompt you to download the latest version of the Blu-ray app. That will then start your movie.

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We tried playback of the 4K Ultra HD Blu-ray versions of Batman vs Superman: Dawn of Justice, Kingsman: The Secret Service and X-Men: Days of Future Past and all three played as if they were regular Blu-rays or DVDs. The one issue we found was with Batman vs Superman. The menu screen kept showing blocky, odd artefacts the first time we loaded it. However, the film was fine.

After we switched the Xbox off and on again even those oddities were gone, so don't panic if you get them too.

Picture quality with 4K Blu-rays is excellent and easily on a par with other dedicated UHD machines we've seen in the past. We have to admit that we only had an older 4K TV to hand, one without HDR, so couldn't reliably tell you how the movies would look with the higher dynamic range colour and contrast, but for crispness and detail there is no parallel.

We have played a couple of games in HDR though, which is also one of the new talents of this upgraded machine. Both Forza Horizon 3 and Gears of War 4 were running with upscaled HDR graphics on compatible TVs at E3 in June and you do get a better sense of depth with the visuals. They'll just as capably play on the existing Xbox One, but the graphical oomph is definitely more pronounced with HDR in action.

One area that we struggled to understand was with YouTube. We suspect the app isn't 4K-enabled yet, even though some videos were listed as 4K in icon form. With the video information set to display on screen, even 4K labelled content would only output in 1080p. It could be the TV, but we had no such problems with an Nvidia Shield Android TV box. That played 4K videos happily, through exactly the same cables and set-up. Maybe the YouTube app will update.

Sadly, the Amazon Video app is not capable of 4K in the UK yet.

Verdict

There's no doubt in our minds that the Xbox One S is a much more capable machine than its predecessor. It is physically more attractive, comes jam packed with new features and offers a smoother, more responsive experience. However, whether that will convince existing Xbox One owners to upgrade is debatable.

It really depends on whether you have cash burning a hole in your pocket and you're ready to jump on board the 4K video bandwagon.

Even the version tested, at almost £350, is well worth considering if you are looking for something to spin Ultra HD Blu-rays. The £250 model, when it releases in a month or so, is a no brainer. We'd even consider buying one for the living room and shifting our existing Xbox One into the bedroom, just because of its media talents.

It still needs additional 4K app support, from YouTube and Amazon Video, so we can completely ditch our other streaming boxes, but we're very happy with its 4K playback from Netflix and off disc.

And let's not forget that, for newcomers, it is an excellent games machine, capable of playing future titles with a wider colour gamut and better contrast than any existing console, be that Microsoft's own or the PS4.

There is the spectre of Project Scorpio looming over it, which will prompt some to hold off an extra year or at least until more details of the beast emerge. But for now, the Xbox One S is the best console on the market bar none. It is also one of the best 4K Ultra HD media players, and that should be more than enough for most.