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Just a thought...since it has USB leads, I've tried to run it through the PC to watch Hot Fuzz & it worked!!! It recognised it straight away and was up and running in no time. So if you want you can bypass the 360 and use it on the computer instead.
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Another great thing about the HD DVD drive is that all HD DVD's are region free so you can play Asian, Japanese, USA, UK and European HD DVD movies in your HD DVD drive (This does NOT apply to standard DVDs). I recently purchased a HD DVD that had quite a lot of scratches and it played fine Plus you can hook the external HD DVD drive to your pc and watch movies on there (provided your pc is powerful enough to do that)..