The New York Times is reporting that Microsoft is set to enter the downloadable video arena via its Xbox Live service on Xbox 360.

Microsoft said last night that it would offer movies and episodes of television shows for downloading through its Xbox Live online service in the United States, starting Nov. 22.

With the new offerings, Microsoft is joining cable giants and Internet start-ups on the long list of companies hoping to profit from video downloading. But Internet-based services have had trouble getting traction because it can be complex to send a downloaded film to a television screen and frustrating to watch it on the small screen of a computer. Owners of the Xbox have already connected it to a TV and, in most cases, the Internet.

“What makes this big is that there’s no PC in the middle,” said Rob Enderle, principal analyst at the Enderle Group.

Microsoft has negotiated the rights to rent or sell more than 1,000 hours of material from CBS, MTV Networks, Paramount, Warner Brothers and Turner Broadcasting, along with the martial arts show “Ultimate Fighting Championship.” Some programs will be available in high-definition video.

The next-gen race just got a little more interesting…

General, Video Games