The Xbox Live Marketplace is going to get an HD injection in a couple weeks. The possibility of buying songs for Zune player with Microsoft points and HD movies and TV shows will become new options shortly.

Microsoft Corp. today announced agreements with CBS, MTV Networks, Paramount Pictures, Turner Broadcasting System Inc. (TBS Inc.), Ultimate Fighting Championship (UFC) and Warner Bros. Home Entertainment to bring an initial lineup of over 1,000 hours of hit TV shows and movies to Xbox 360™ gamers in the U.S. by the end of the year. Furthermore, Xbox 360 will be the first gaming console to bring standard and high-definition TV shows and movies via digital distribution over the Internet directly to the consumer.

The movie shows will be available for viewing in a 24 hour viewing period, rental style, within 14 days of download. TV Shows will be sold similar to iTunes. Whole seasons and season passes? Not sure on that one yet.

The problem with saved video content, especially HD content on the Xbox 360 is hard drive space. 20GB for HD video content is nothing. In the case of the rental movies, they will go away, but you’ll still need enough space available to watch. We already burned up our Mac hard drive with music and video content for Kara’s iPod and have another external hard drive on the holiday shopping list. Saw a 500GB external drive at Costco for $229 yesterday. Will we see TB drives for this price a year from now? It almost seems criminal that Microsoft and Sony are selling their systems with sub 100GB drives. I know they’re both losing money, but come on. This could become a major gripe this holiday season.

What others think
Angel also worries about hard drive space: “It would be great if we could transfer the shows to an external hard drive or to our computers in order to free up space, but unfortunately Microsoft has already stated that they will not support external drives.”
David Hunter ponders pricing, which hasn’t been announced yet but Microsoft says will be competitive.: “the only difficulty is that the user experience has been problematic and the cost effectiveness dubious compared to physical purchase or rental, or cable TV ‘pay-per-view.’”
Lost Remote: “The one advantage over iTunes is that the 360 is already connected to the TV. But in a disadvantage, the downloads aren’t portable.”
Davis Freeberg sees this as a blow to Apple: “With Microsoft’s ability to support HDTV downloads and having the ability to play video games on the system, it’s going to make it all that much harder for Apple to convince people to fork over $300 dollars in order to have the privilege of being able to pay for VOD films.”
Thomas Hawk calls the Xbox 360 Microsoft’s “trojan horse” in the living room. Hawk compares to the Media Center. Yeah, everybody wants their gadget in our living rooms and the Xbox 360 has a better chance than a loud, power-hungry Media Center PC.

Microsoft’s secret weapon: micropayment
I’ve mentioned several times here that I think Microsoft can make — and already is to some degree making — a splash with their Live Marketplace particularly in the micropayment area. This is unannounced and pure speculation on my part but just imagine if they wrap their Adcenter for webmasters — think Adsense, webmasters — to encompass the content on the Live Marketplace? Wow. Will they pull the trigger?

And let’s not forget the pipeline of indie games that will be making their way to the XNA Games Developers. How many, I’m not sure, but for $100 a year, this will give gamers a chance to make their own games and/or share games with others. This is a market that Sony has repeatedly snubbed on the PSP platform. Will Sony get their act together with the PS3 and offer something similar? Considering their history, doubtful.

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