Microsoft today revealed its hand at Tokyo Game Show, with the surprising announcement of an update that will allow the Xbox 360 to output 1080p games and videos (presumably downloaded via Xbox Live).

The highest of high definition resolutions will be available for both games and HD-DVD movies, putting the Xbox 360 on par with Sony's PS3. Presumably the Xbox 360 will deliver 1080p movies via an HDMI cable. As far as we're aware, HD-DVD will not output in such high resolution via a component cable, because component doesn't carry security data, unlike HDMI. The update will upscale existing games and even DVD movies to 1080p resolution.