Microsoft is busy announcing a slew of upgrades to Xbox Live, and the biggest news so far is relaunch of the video service, now Zune-branded with 1080p instant-on streaming content in 18 countries. XBL is also now integrated with Facebook -- your Facebook account can be linked to your Gamertag, and games will support Facebook Connect for sharing content online. That's pretty huge -- but if that wasn't enough, you're also getting Twitter and Last.fm in the deal. Want more? Netflix users will now be able to browse the entire catalog instead of simply loading their queue, and Microsoft has also gotten its Party Watch system in order, so you'll be able to heckle videos with your online friends. Last but not least, there's now live TV streaming for UK and Ireland gamers, who'll get Premier League soccer live from Sky. All in all, a solid set of updates for XBL -- but we'll wait and see how that "1080p" video looks before we pronounce Blu-ray dead. PR blurb after the break.

Today from the E3 stage in Los Angeles, Microsoft announced plans to dramatically improve their HD video offering through a new technology that enables instant on 1080p streaming with 5.1 audio with Zune video on Xbox 360.

This implementation is as close to a "disc in the drive" experience as possible over the Internet. At a high-level, here is how it works:
  • Video startup is nearly instantaneous because of the back-end proprietary Microsoft technology developed by Zune that seamlessly transitions between many different bitrates and resolutions of video.
  • Video playback will start at a low bitrate for fast download time and then ramp up to a higher bitrate and quality, up to 1080p with 5.1 audio.
  • Features such as smooth fast forward and rewind that users have only seen before with local physical media.
It doesn't stop there. Other news coming out of E3 for Xbox LIVE Video Marketplace:
  • Social: We unveiled Movie Party, a feature where you can go to the movies with your friends whether you are sitting on the same couch or in living rooms across the country. Starting this year, you can share a virtual theater, see your Avatars (a virtual you) on the screen – all while you listen to each other laugh and cry together at the movie through voice chat on Xbox LIVE.
  • New Regional Partners: Now, for the first time Xbox LIVE members in the UK and Ireland can watch live or on-demand TV with BSkyB on Xbox. Never miss a moment of your favorite live TV shows, sports, movies and family-friendly entertainment – even share your favorites with up to seven friends in an Xbox LIVE Party.
  • Global Expansion: The 1080p streaming HD Zune video experience on Xbox LIVE marketplace is expanding to 10 new regions this year, making movies and TV shows available in 18 total countries including US, Canada, UK, Ireland, France, Germany, Italy, Spain, Denmark, Finland, Norway, Sweden, Netherlands, Belgium, Switzerland, Austria, Australia, and New Zealand. (Note: content and partners vary by region)