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Microsoft Delivers HD Downloads to Xbox 360

It’s been nearly a decade since the consumer electronics industry began talking seriously about the PC becoming the center of the media experience in the home. But it was an announcement this week by Microsoft that it will deliver HD and SD movies and TV programs via broadband connection to the Xbox 360 game console beginning on Nov. 22 that could finally turn that talk into reality.

Among the early believers in the service is CBS and Viacom with programs like CSI,Jericho, and Numb3rs available via download. While users will be able to own the TV programs they’ll only be able to rent movies for a 24-hour period that begins once the movie has started playing (it will also only be on the hard drive for 14 days).

All content will be encoded using Microsoft’s VC1 Windows Media Video HD codec at a rate of 6.8Mbps and also has 5.1 Surround Sound. File size will be roughly 4-5 GB for HD content and users will be able to play the movie as soon as it has downloaded enough content to trigger a “ready to play” message.

The move by Microsoft is the latest salvo in its battle for the third-generation gaming console market and also signals the beginning of a new era in game consoles: putting the PC-like processing speed to use for something other than life-like computer graphics.

Microsoft says it will make more than 200 hours of HD content available for download by the end of 2006 from CBS, Warner Bros, Viacom, Paramount, UFC and Turner.

Michael Gartenberg, Jupiter Research VP and research director says that while secondary features don’t sell gaming consoles it gives an added wrinkle to the high-definition DVD format war between HD-DVD and Blu-ray.

“It gives family members that aren’t gamers a reason to use the console,” he says. “But at the end of the day a console is still bought because of the games.” Microsoft also gains additional leverage against Apple’s iTunes download service.

The move by Microsoft couldn’t come at a better time for the company. Next week Sony launches the much-anticipated PS3 gaming console with built-in Blu-ray high-definition DVD playback capabilities, and inherent advantage to Xbox 360 which requires users to add an external $199 HD-DVD drive in order to watch movies.

But the new download service takes advantage of the Xbox 360’s hard drive for storage and steers clear of the HD-DVD vs. Blu-ray battle which has left both formats struggling.

The Yankee Group is forecasting that by year end there will be 11 million Xbox 360 consoles in the U.S., accounting for 74% of third-generation gaming consoles in the U.S. (Sony will only ship 400,000 PS3 units through next March as it looks to meet worldwide demand). Mike Goodman, Yankee Group analyst, says PS3 cumulative sales will not pass those of Xbox 360 until 2011.

“The thing to keep an eye on is whether Microsoft introduces connections to other devices because right now content is locked to the Xbox,” he says. “It will be interesting to see how it migrates to other devices.”