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Microsoft has announced that they will be incorporating a 1080p HD DVD capability into its Xbox games console.

Also announced are several other upgrades which add over 85 additional enhancements to the game console, also including the ability to play WMV files from a connected PC, disc or USB storage device.Currently, the gaming console only supports streaming video from connected Windows Media Center PCs. After the update has been downloaded, the console should accept streaming video from any connected XP PC equipped with Windows Media Connect or Windows Media Player 11, Microsoft announced during a press conference in Japan this week.

Microsoft plans to launch the HD DVD add-on drive later this month at around US $199 suggested retail price. This could well translate to being $299 in Australia. For a limited time, Microsoft will offer purchasers of the HD DVD drive a free copy of Peter Jackson’s “King Kong” from Universal on an HD DVD disc.

Other added features in the update include the following:

Support for 50hz HDTV display modes, providing viewers greater choice in how they watch DVD and HD DVD content.
 Automatic downloads of newly released Xbox Live Arcade trial games.
New Xbox Live game sorting options such as “Recently Played” and “By Category.”
An expanded Friends Leaderboard within Xbox Live Arcade allowing comparison with friends and a view of leaderboard details of their top-10 friends.
An expanded Achievements View within Xbox Live Arcade that lets gamers view their full Achievement details for their Arcade games.
A streamlined “Play Now” feature that bypasses Arcade and takes you directly to the game.
Xbox Live Arcade now offers a “Tell a Friend” feature. Select this from the game info screen to send any friend on your friends list a message telling them about the Arcade game.
The free update will be distributed via the Xbox Live online gaming and entertainment network to all members (Xbox Live Silver and Xbox Live Gold) with no disc or hard drive required.

Gamers without an Xbox Live account can sign up for free by connecting their console to a broadband Internet connection.

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