In a competitive counter to rival Sony, Microsoft Corp. on Monday announced a new download service that would let owners of its Xbox 360 video game console watch high-definition movies and TV shows.
The service comes two weeks before Sony Corp.'s PlayStation 3, which includes a next-generation DVD player, hits stores. More broadly, though, it hints at the day when physical media -- DVDs, videotapes and the like -- may be obsolete.
"There's going to be a point of time in the next couple of decades where people aren't going to care about media types anymore," said Scott Henson, director of platform strategy for Microsoft. "I think this informs what's going to happen with formats, period. It's going to move to digital distribution."
Microsoft struck deals with Warner Bros. and Paramount Pictures to offer on-demand movie rentals through its Xbox Live Video Marketplace. The site currently offers video game demos, movie trailers and music videos.
CBS, Turner Broadcasting and MTV Networks will sell downloads of TV shows that appeal to the Xbox's mostly young, mostly male audience, including "CSI: Miami" and "South Park."
Microsoft did not announce pricing, although people familiar with the service, which begins Nov. 22, said movies would rent for $3.99 for new releases and $2.99 for older titles. TV shows are expected to sell for $1.99.
Microsoft's service could narrow the gap in features between Xbox 360 and PlayStation 3. Sony's machine, which debuts Nov. 17 and starts at about $500, includes a Blu-ray high-definition DVD player, key to the company's efforts to broaden its gaming franchise into a larger play for control of the living room.
The Blu-ray format competes against the HD DVD format, and few analysts think that both technologies will thrive. Fear over a replay of the fight between VHS and Betamax in the 1980s has hampered sales of the players. If PlayStation 3 is a hit, Blu-ray's base could grow rapidly.
"The drive in this generation is about these devices not only being game devices and taking on a greater role and having appeal to other members of the household," said Michael Gartenberg of Jupiter Research. "Microsoft is hoping these types of things will tilt the purchase decision over to Xbox."
In addition to the download service, Microsoft plans to sell an HD DVD drive that can be added to Xbox 360. That will cost about $200. To download movies, Xbox 360 owners need to have a hard drive installed, which is not included in the $300 base price.
