Albert Penello, director of global marketing for the Xbox 360, said at the E3 gaming conference in the US this week that the add on "carries with it an extension of the HD era that Xbox 360 offers, and provides the most visually stunning movie watching experience available".
"This new accessory will connect to the Xbox 360 console with a USB cable, enabling it to harness the power of the Xbox 360 for the HD video outputs and digital surround sound," he added.
"As an accessory, it becomes another shining example of the flexibility designed into the Xbox 360 console in order to grow and add new features."
Microsoft threw its support behind the HD-DVD camp with the announcement that the forthcoming Vista operating system will support the new high-resolution format.
A wide-reaching system for digital rights management when playing videos or audio files is also under development, but this technology is not likely to be popular with many users.
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