Downloaded the "New XBox Experience" tonight. Microsoft finally did it, the 360 is now more than just a video game machine. Yeah, they had pay per view movies before, but they weren't a very good deal and they have the 24 hour playback window that plagues all online PPV services.
The Microsoft-Netflix partnership changes everything. There is lots and lots of stuff you can instantly stream through the 360. And there are a handful of movies & shows available in HD.
The picture quality of the Netflix streaming is amazing. We watched an episode of 30 Rock from last year that was HD, and the quality wasn't as good as the HD over DirecTV, but it was really good. We also watched the Heroes pilot in HD, and it looked great as well. We are currently watching an old movie that isn't in HD, but it looks identical to a DVD as far as I can tell, much better than SD TV.
The only problem people may have with the Netflix streaming is the heavy bandwidth requirements for HD. You need some seriously big tubes for the highest quality HD stream. We have a 6Mb/sec DSL line and we only got 3 out of 4 "quality bars" for the HD streams. Like I said above, it still looked great.
It's not a free feature, though. You have to have an XBox live Gold subscription to stream Netflix, which costs $50/year. You also need to have a Netflix subscription, which is $15-20/month.
It's funny, when we set up the Wii on Monday, I thought the 360 wouldn't get used much. Now I think we are going to use the 360 now more than ever.
Netflix's original business model was groundbreaking, movie rentals with no late fees and "infinite" selection. This is going to be bigger, now that their streaming capability is available on 360s, HD Tivos and their $100 Roku boxes. I wouldn't be too surprised if streaming shows up on the PS3 sometime in 2009.
For the other new stuff, the avatars are somewhat nicer looking versions of Nintendo Miis, but it's obviously a response to them.
Being able to download games to the hard drive is great, but since I have the original 20GB drive, there isn't room to install more than one game on it. It really sucks that, unlike Sony's PS3, you cannot upgrade the hard drive yourself. The only option is to buy Microsoft's 120GB drive, but at $140 it is a huge ripoff.