As reported yesterday, the next generation DVD format war took an unexpected turn when Microsoft announced it would be partnering up with Toshiba to promote the HD-DVD format. Now, it has emerged that Microsoft might consider using HD-DVD in a future update of the company's upcoming Xbox 360 video game console. The news, which was announced today in Tokyo, might help further turn the tide in Toshiba's favour.

"The initial shipments of Xbox 360 will be based on today's DVD format," Gates explained. "We are looking at whether future versions of Xbox 360 will incorporate an additional capability of an HD DVD player or something else."
It is not likely, however, that the extra storage capacity gained through HD-DVD will be used to enhance games - more likely it will be used to enable the Xbox 360 to play HD movies stored on the format.