"We really feel like ... this generation is about digitally distributing this type of content - we've seen that with music, we've seen it with games and now we're seeing it with entertaiment content,'' he said.

That doesn't necessarily mean Microsoft's going to announce a hookup between Xbox Live and Netflix, as MSNBC speculated today. Greenberg said they were "surprised" by some of the info in that piece.

Greenberg did go on to say how pleased Microsoft is with the current lineup of high-definition, downloadable programming XBL already offers, through partnerships made directly with content owners.

"For on-demand, high def entertainment, we have the largest library in the industry,'' he said, noting that the service offers nearly 4,000 hours of content and more than 300 movies.

Maybe they're still negotiating with Netflix.

Sony's PlayStation 3 will surely get a bump from the news that it's differentiating feature, a Blu-ray drive, won't be made obsolete by a format war. But Xbox won't suffer from HD-DVD's demise, according to Greenberg.

"The fact is that we don't really think that this is going to have any material impact on our platform. As we know games are what sells consoles. That continues to be a leadership point for us."

Will Microsoft lose favor among game developers, who might gravitate toward the higher capacity of the Blu-ray discs used in the PS3?

"We haven't heard from any of our developers that that's an issue. There's still quite a bit of space there,'' he said, noting that the standard DVD format handled big, recent games like "Halo 3" and "Gears of War."

I'll bet Microsoft will further cut the price of the external HD-DVD drives for the Xbox, which have fallen from $200 to $130 over the last year.

Greenberg didn't have any word on prices, but said there aren't many of the gadgets left anyway.

"My understanding is that there's not much in the channel."

Media Center blogger Chris Lanier had more thoughts on why Blu-ray won't happen on the Xbox, namely that Microsoft won't be adding the Java interactivity layer that Blu-ray support involves.

Still, I wonder if Microsoft will be working the DVD standards body to make Blu-ray more palatable. Toshiba's announcement comes a week before that group, the DVD Forum, holds a major meeting in Tokyo.

I'm not up on the particular standards, but I wonder if Microsoft is already lobbying for changes to the Blu-ray standard. Could it argue that since Blu-ray's now the default format, its standards should be expanded to include additional capabilities - such as Microsoft's interactivity layer?

Or maybe we've all had enough format warring.