Now, the idea of downloadable movies on 360 is nothing new. In fact, we've been downloading high def clips ever since the console launched. Still, we've heard rumors of more substantial downloads for a long time. Die-hard 360 fanboys will recall the rumors of a DirecTV blade being added to the dash and another rumor of IPTV support. So, what makes this rumor different? One, Bill Gates thinks digital distribution is the future, even saying that HD DVDs and Blu-Ray will be the last generation of physical media. Two, that mysterious Video Marketplace button that was added in the Fall dash update might be more than we thought.
Of course, there are plenty of reasons why it won't work, with the most obvious being the 360's 20 gig hard drive. 20 gigs just isn't enough space for a collection of HD movies and all game related data. Unless Microsoft was lying when they denied the existence of a 100 gig hard drive, or they have some sort of streaming solution planned, the 360 really isn't the best place to keep your movies.
Still, from a business standpoint, it makes sense. Sony is offering similar services, and Microsoft has been quick to update the 360 in order to compete (1080p anyone?). And there is one more thing that adds credence to this obscure rumor: it's not there anymore. The rumor has been removed from Shsibae. Did MS ask them to take down the news, or did Shsibae know the internet would jump all over it? Only time will tell.