Xbox 360 "Games on Demand" coming in August

There's been such a flood of news coming out of E3 this week that I'm only now getting around to this tidbit: Full downloads of Xbox 360 titles—including Mass Effect, BioShock, and Call of Duty 2, for starters—coming to Xbox Live this August. Now, if Microsoft would just cut the price of the 360's outrageously expensive 120GB external hard drive ...

MTV Multiplayer has the scoop on Games on Demand, which Microsoft execs didn't even bother to mention during their E3 keynote on Monday (what with the parade of motion-control cameras, Facebook and Twitter apps, streaming 1080p video announcements, not to mention on-stage cameos from the surviving ex-Beatles).

So here's the deal: Starting in August, we'll be able to purchase and download full Xbox 360 titles over Xbox Live. The initial lineup will include classic titles such as "Mass Effect," "BioShock," "Call of Duty 2," and "Assassin's Creed." Live already offers a series of original Xbox games for download, but this'll mark the first time that 360 tittles have been available online.

Xbox execs didn't give details on pricing or how soon new 360 titles might be available via "Games On Demand"—although, as MTV Multiplayer notes, a Microsoft spokesman "didn't rule out the possibility that new games could become available on Xbox Live right on launch day." Now that's cool; no more waiting by the window for the UPS guy to arrive with that new release.

Of course, one of the downsides to the Games on Demand plan (besides the fact that some titles tend to be buggy when running off a hard drive; Microsoft is promising a "rigorous" testing process for upcoming on-demand titles, Kotaku reports) is that hard drive space on the 360 comes at a premium, especially for those of us with older consoles.

The current, $299 Xbox 360 bundles comes with a relatively roomy 60GB hard drive, while the $399 "Elite" boasts a 120GB HDD. But I have an older 360 with a 20GB drive, and with 360 games taking up anywhere between three to seven GB of disc space, my old 20GB HDD is looking pretty tiny. The only way to expand your Xbox storage? Microsoft's 120GB Xbox hard drive accessory, which costs a cool $149—more than a few 1TB hard drives I've seen on the market. If you ask me, it's high time that Microsoft stopped gouging us on hard drive space; otherwise, I'll be skipping the new On Demand feature.

Anyway, what do you think: Would you buy old—or new—Xbox 360 game downloads over Live? Or do you prefer a physical DVD, or a bargain-priced used disc?

Related:
Microsoft To Offer Full Retail Games on Xbox Live [MTV Multiplayer]