UPDATE: Sounds like it was a rough launch, but the kinks are getting worked out. It may be a good thing I'm in the boondocks for the holidays and missing the early adoption. Read the comments on majornelson.com -- interesting stuff from a bunch of folks who I'm guessing don't know know large-scale service deployments (I do, so I'm all about grace on this one).

The Xbox Live Video Marketplace has launched, with a decent bevy of content, and acceptible pricing.

Prices range from $2-6, and though I would prefer to see some of the older half hour standatd definition TV shows for a buck, this pricing still seems reasonable.

Purchased content is owned into perpetuity, and if you buy the hi-def version, you get the standard def version for free (which is nice).

Microsoft is implementing there version of DRM for rentals, which makes me nervous, but maybe they'll get it right this time (as opposed to the Windows Media Player 11 beta).

More info at Gamasutra.com:

http://www.gamasutra.com/php-bin/news_index_plain.php?story=11817