Zune HD has a built-in HD radio receiver, HD video capability, 3.3in OLED touch screen and an internet browser using a mobile version of Internet Explorer. It's seen as a key rival to Apple's iPod Touch.
However, there are no details of a UK launch for the Zune HD yet.
What we do know is that the Zune video service will be the "premium partner" in the Xbox Live Video Marketplace, bringing "an exciting catalogue of TV and films to the platform".
At the Electronic Entertainment Expo (E3) in Los Angeles next week, visitors will be able to see first-hand how Zune integrates into Xbox Live.
Users will be able to watch a wide selection of TV and film content how and when they want, either by instant streaming, downloading to rent or downloading to own. There will be additional content in high-definition.
This is the first time Microsoft has marketed the Zune entertainment service in Europe and is described as a "key step" in Microsoft's strategy to offer consumers a connected Zune experience across three screens (TV, PC and mobile).
"Zune's international expansion starts with video on Xbox Live," says Chris Stephenson, general manager of consumer marketiing for the TV, Video and Music business. "Eventually we'll offer the full digital entertainment experience spanning screens, devices, platforms and geographies."