Xbox 360 PayPal update arrives right on schedule ... in some territories

Microsoft has today begun the anticipated rollout of probably the least anticipated Xbox 360 system update in the post-NXE era. The automatic update is being "gradually" deployed to consoles across the globe through Xbox Live over the next few weeks. "Just like any other update to our service," Major Nelson notes, "you will know you've received it when you turn on your Xbox 360 console, connect to Xbox Live and receive a notification to download the update."

Most notable, the update includes the option to add your PayPal account as a billing option on the console (it was previously limited to for Microsoft Points and Marketplace content purchases. The feature will be available to all Xbox Live users, excluding those in Brazil, Chile, Colombia, Czech Republic, Finland, Greece, Hungary, India, Japan, Russia, South Africa, South Korea and Taiwan. So ... just a few (million) people left out.

Additionally, the new system update adds and enables (by default) an auto-standby feature that's activated after one hour of console inactivity. You can switch it off in System Settings, but ... why? Finally, the update will also introduce support for the new Xbox game disc format (a.k.a. "XGD3"), which adds 1GB of storage capacity and some fresh anti-piracy coating.

According to internal documents we obtained earlier this month, Avatar Kinect is scheduled to be released as a separate update on May 27.