Ever since the launch of Xbox 360 there has been speculation that Microsoft would eventually add a Blu-ray drive to the system. We have argued strongly against these rumours. At E3 yesterday Microsoft finally laid its cards on the table: from this autumn it will offer instant-play 1080p content to Xbox 360 users. With a strong nudge in the direction of Blu-ray, the press release says “No discs, no waiting for downloads and no delays”. Xbox Live has offered HD content for some time, but only in 720p. Microsoft appears to have abandoned its previous line of defence, that consumers could not tell the difference between 720p and 1080p. The upgrade to 1080p, and the promise of instant access, finally positions the Xbox 360 as a serious video alternative to Blu-ray Disc-based systems, ie the PS3. Viewers will be able to pause, fast forward and rewind on-demand video content. Microsoft is re-encoding video content, has re-built the technology stack, and is introducing multi-bit-rate encoding and buffering support in order to make these advanced features available. Microsoft has also said that all movies will support shared viewing, so that viewers in different locations can watch the same content and share messages at the same time. The business models behind such applications remain to be determined. Content owners will be able to explore the value of encouraging such social networking activities. We’ve been predicting the 1080p move for some time, while at the same time highlighting the challenges for such services. The Xbox Live network may be up to the task, but the individual user experience will inevitably hinge on the speed and reliability of broadband access. Microsoft originally told us users would need a minimum access speed of 10Mbps, but appears to have reduced that requirement to 8Mbps. This is clearly a significant limitation to the reach of the 1080p service; broadband speeds are rising steadily, but they vary significantly in each country. It also seems likely that heavy users of 1080p streaming may soon encounter the data download limits set by their broadband service provider, as I pointed out when the Sky-over-Xbox service was launched. In spite of these concerns, it is clear that Microsoft continues to extend the boundaries of the traditional games console model towards the all-round home entertainment platform always promised by the Xbox 360. All we need now is for broadband service to catch up with the potential offered by these systems. Twitter: twitter.com/DavidMercer_SA Client Reading: Global Digital Media Growth Slows to 2.7% in Q4 2008