Microsoft's time at E3 has hit a snag thanks to a remark during a demonstration of "Killer Instinct" for the Xbox One which many have interpreted to be a rape joke.

The demonstration began innocently enough with a male producer of the game playing against a female gamer, reported CBS.

"I can't even block correctly, and you're too fast," she said.

"Here we go. Just let it happen. It'll be over soon," he said.

And despite a healthy laugh from the audience, that was enough to set off the internet along with members of the audience who didn't find the comment to be as funny.

"The demo included friendly ad-libbed banter and there was no ill intent," tweeted Ashton Williams, the female gamer who received the alleged rape joke.

"The comments during the KI demo were not scripted."

As a subsidiary of Microsoft Studios, Rare Ltd produced "Killer Instinct" as an Xbox One exclusive. Microsoft later released a statement on the matter.

"Yesterday, during the Xbox E3 briefing, one of our employees made an off the cuff and inappropriate comment while demoing 'Killer Instinct' with another employee. This comment was offensive and we apologize," said Microsoft vice president Phil Spencer.

"At Microsoft, being open and respectful with others is central to our code of conduct and our values. Bullying and harassment of any kind is not condoned and is taken very seriously. We remain committed to make gaming fun for everyone, and in that effort, we must lead by example."