We still don't know the US price or launch date, but we've got a bit more specifics on how the Xbox 360 HD DVD player add-on will work when it hits store shelves later this year thanks to a post by Microsoft insider Amir M. on AVS Forum. When Microsoft revealed yesterday it will support 1080p HD DVD and 1080p DVD upconversion we were surprised because it's commonly accepted that the CSS (DVD) and AACS (HD DVD & Blu-ray) copyright provisions wouldn't allow that (although some manufacturers have looked the other way before) via unprotected analog connections. We were right, sort of. Even after the software upgrade this fall, via component cables, the Xbox 360 will still only upconvert DVDs to 480p, and will play HD DVD movies at a maximum resolution of 1080i. To get 1080p output for movies, you must use a VGA cable, which is not subject to the same copyright restrictions. This just means the Xbox 360 is just like every other HD DVD and Blu-ray player on the market, but you wouldn't know that by reading Microsoft's press releases yesterday. If you ran out and bought a 1080p HDTV yesterday don't return it just yet, you should be able to get equal picture quality to 1080p if your TV processes the incoming signal correctly, and if it supports 1080p via component you can still play upconverted and native-1080p games . We're still waiting to hear exactly how HD DVD's advanced audio capabilities will be handled by the 360 and oh yeah...a US price, please Microsoft?.

Update: Added list of supported resolutions after the break.
To break it all down what you will get from the Xbox 360 after this fall's software update:

VGA:
  • HD DVD - 1080p resolution and all others
  • DVD - Upscaled as high as 1080p resolution and all others
  • Games - 720p games upscaled to 1080p, also supports native-1080p games in the future
Component:
  • HD DVD - 1080i resolution maximum, limited by AACS
  • DVD - Upscaled to 480p maximum, limited by CSS
  • Games - 720p games upscaled to 1080p, also supports native-1080p games in the future

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Xbox 360 HD DVD playback: Maximum 1080i via component, 1080p VGA-only