On the heels of Netflix readying its launch into the Canuck market, Microsoft’s own digital entertainment service is expanding its offering in Canada this fall.

It will include movie purchases and rentals for download that can be watched through Microsoft’s gaming and digital media delivery service Xbox Live (through the Xbox 360 console) as well as Windows-based PC. Content can also be synched to the soon-to-be-launched Windows Phone 7 for watching film on the go.

“The integration between Zune, Windows Phone 7 and Xbox LIVE is an exciting expansion in our entertainment offerings,” said Craig Eisler, corporate VP, Interactive Entertainment Business Group at Microsoft. “Zune enables users to access the entertainment they want, wherever they want it.”

Zune Software has been upgraded in preparation for the expansion. New features include its Quickplay menu, giving immediate access to recently played content and personal favorites and also enable instant streaming of HD movies.