Rumors are circulating that, in addition to playing HD-DVD movies, the Xbox 360 will soon be a digital entertainment hub for downloadable video content. This sounds like something that would take a lot of time and infrastructure, but who knows - those are two things MS definitely has in spades. Plus, by avoiding the HD-DVD/Blu-Ray format war, Microsoft could puts Sony in a tough position. Either Sony has to start offering downloadable movies as well (thus cutting into their hopes for Blu-Ray), or the Xbox 360 just starts looking a little stronger in the features list.

SHSIBAE has learned that Microsoft will begin offering downloadable HD movies later this month. At launch time– rumored to be around Nov. 22–over 1100 hours of video will be available to rent or purchase through an XBOX 360 connected to XBOX Live. Feature length movies will require a ten minute caching period before viewing, which should be just long enough to make some popcorn, grab a beer, and find your favorite blanket.

We’ll definitely be looking for some sort of non-denial denial from Microsoft, but it never hurts to dream, eh? The idea of downloading movies to your Xbox 360 and watching them minutes later sounds amazingly sweet.