The announcement comes the day before Microsoft releases its highly-anticipated Live Experience to Xbox 360 users.  The new system will improve interaction among players on the network, introduce player avatars and revitalize the Xbox 360′s interface.  Sony is probably hoping to dispel the common conception that its PSN is inferior to Xbox Live, which seems to be preferred by most regular gamers.

Microsoft is very excited about the new Live Experience, insisting that it represents that future of home entertainment content. “With the New Xbox Experience we will reach the next generation of Xbox owners, 25 million and beyond.” said Don Mattrick, senior VP at Microsoft. “We are at a watershed moment, backed by the largest entertainment brands, with an incredible line up of entertainment unmatched in any industry.”

As Mattrick indicated, Microsoft is approaching 25 million Xbox 360 consoles sold.  Compare that to 35 million sales for the Nintendo Wii, and 17 million for the PS3.  Although the Wii is reaching a wider audience, Microsoft is confident that it can maintain its lead over the PS3 indefinitely.

Needless to say, Microsoft has high hopes for its updates, but insists that the new Live Experience is just the beginning.  Xbox 360 players can judge for themselves tomorrow.  The new Xbox Live Experience update will begin downloading automatically on Wednesday when players sign into Xbox Live.

The new system will offer not only feature films but also full-length television programming available over the PlayStaiton Network.  No official date has been given, but word is that the PS3 will introduce some of these services this summer.