Brian Crecente if Rocky Mountain news as well as Kotaku spoke with corporate vice president of Microsoft Game Studios Shame Kim.
The interview was roughly 10 mins and Brain did not waste anytime and went straight to the point!

Kim was clear that the console could support true 1080p out.
"If it is running at 720p we will up-res it to 1080p, if it it's already 1080p then we can display it in 1080p," he said. " This is a great example of our console's ability and the great advantage of being a software company."

Kim said that while the console will soon support 1080p out, it will not have an HDMI out.

"We have the ability to output either through VGA or component. We have no HDMI announcement now," he said. "We do have the capability to deliver the software and, if needed, the hardware."

I pointed out that some movie studios have said they will use HDMI output as a form of copy protection and Kim acknowledged that if a studio uses that scheme then HDMI will indeed be required.

While Kim expects that some third-party game developers will create 1080p games, he said that 720p will likely remain the norm.

"We believe 720p is the sweet-spot for high definition," he said, adding that Microsoft Game Studio titles will, for now, continue to be created at 720p.

While the release of a low-cost HD-DVD player for the 360 could help make the console more competitive against Sony's upcoming PS3, Kim things the main development that could help jumpstart 360 sales in Japan are game titles.

Kim said that Microsoft plans to have 110 titles available for the 360 by the end of the year in Japan and 160 in North America.

"It's all going to be about the content and how customers value the content," he said.