Rumours are circulating the web that Microsoft is collaborating with Toshiba to build an Xbox 360 console with an internal HD DVD drive. As reported by our gaming buddies over at CVG, the new console might also come with a bumper-sized hard drive and revamped Media Center software.

There is also wispy talk of an HD DVD-equipped Xbox 360 packing dual digital HDTV tuners and recording facilities. If true, the new console would be looking to strike a blow at Sony's PlayStation 3, which already packs a Blu-ray drive and will shortly be graced with the PlayTV digital TV recording peripheral.

Is an internal HD DVD drive likely?

Microsoft is bound to be considering an internal HD DVD drive. As much as it might irritate gamers who have bought existing versions of the console, incorporating an HD DVD drive into the Xbox makes a lot of sense.

There's almost no chance that such an internal drive will be used for higher capacity game discs, as it would instantly render obsolete the 11 million or so Xbox 360s that Microsoft has already sold.

But as a one-box games and HD movie player, a new Xbox model is an obvious option for Microsoft. The original Xbox 360 launched in 2005 and it's now starting to look rather dated. An integrated HD DVD drive and some boosted Media Center features would go a long way to fuelling the future of the Xbox franchise, making it the living room-friendly media hub that it's always strived to be.

Microsoft hasn't been afraid to launch different versions of its console. The Xbox 360 Elite system added an HDMI port, while the forthcoming Arcade package offers a new entry-level bundle without a hard drive.

Free HD DVD movies

On the official side of the news, Microsoft said today that when you spend £114.99 on the Xbox 360's external HD DVD drive, you'll get five blockbuster HD DVD titles thrown in absolutely free.

From now until the 31 January 2008, if you purchase the HD DVD player for your Xbox 360, you'll be able to choose from 13 major film titles from studios including Warner Brothers, Universal, Dreamworks and Paramount.

To receive the free movies, you simply need to send in a form, along with the barcode of your new HD DVD drive and Microsoft will ensure you are sent your free HD DVDs within 28 working days.

The titles on offer are: Serenity, The Chronicles of Riddick, Hulk, Children of Men, The Fast and the Furious: Tokyo Drift, Troy, Full Metal Jacket, Corpse Bride, The Prestige, Swordfish, Black Rain, Dreamgirls and Word Trade Center.