As a result of the complexities of decoding HD DVD audio and video content, as well as providing a user interface and DRM, over 4.7 million lines of code went into the HD DVD software. The external HD-DVD drive can play H.264, MPEG2 and VC1 videos. There is no hardware HD DVD decoder chip set on board the Xbox 360. As a result, the HD DVD subsystem is almost entirely written in software. It's one of the most demanding applications written for the 360 to date, using up all six of the system's hardware threads.
Shaheen Gandhi, an Xbox 360 engineer, said: "At the moment, the player software pushes Xbox 360 harder than any other (save, perhaps, Gears of War during some particularly busy parts of the game)."
News source: Team Xbox