Microsoft has announced that it will be releasing a new HD-DVD drive for its Xbox 360 home video game console. This follows earlier reports that the company will be taking 20 Euros off the price of the console's current HD-DVD drive.

The announcement was made during Microsoft's 25th hardware anniversary in London. The updated HD-DVD drive's advanced interactive features were demonstrated by Mark Bennett, Microsoft's European business development director for HD DVD.

"The interactive features actually work on HD DVD whereas Blu-ray titles are six to nine months away from getting features that actually work," said Bennett. Bennett also noted that Microsoft has more plans to incorporate HD-DVD into PCs in the future.

The same event also saw Microsoft's announcement that it will start offering HD movie rentals through its Xbox Live service in the UK before Christmas.