The new system transmits high-definition video and comes with a larger hard drive in its latest effort to position the video game machine as a digital media hub.

Microsoft said the Elite hard drive has space to hold a library of arcade games and thousands of songs, as well as high-definition television shows and movies downloaded from the company's Xbox LIVE online service.

"Today's games and entertainment enthusiast has an insatiable appetite for digital high-definition content," said Peter Moore, corporate vice president for the Interactive Entertainment Business at Microsoft.

Microsoft said it will sell the Elite alongside existing Xbox 360 systems and it will offer the detachable 120 gigabyte hard drive for $179.99.

CNN