Content will go on sale via internet-connected Xbox 360s on November 22 and Microsoft claims it will offer more than 1,000 hours of TV shows and movies by the end of the year.
Some content, including episodes of CBS shows 'CSI' and 'Star Trek', can be bought and stored either on the Xbox 360 hard drive or remotely for viewing at any time.
Other content, including movies such as Warner Bros' 'Superman Returns' and Paramount's 'Jackass: The Movie', is for rental. Renters will have 14 days to start watching a film and 24 hours to finish watching once they start.
However, HD films will be in large files up to 4Gb in size and will take around six to seven hours to download via cable broadband, according to Microsoft.
The move gives Microsoft an edge in the battle with other technology companies with ambitions to become leaders in the distribution of digitised content such as Sony and Apple.
Microsoft has not issued any details on the pricing of the service or when it will be available in the UK.
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