Roku has debuted the next generation of its set-top entertainment player, aiming to solidify its position in the streaming entertainment sector. In addition to adding 802.11n support across all devices and improved Netflix support for high-end models, the Roku now does games.

Roku has created a Wii-like Bluetooth motion remote accessory that allows for gameplay on the device and retails for $29. The first title to support this new functionality will be the ever-popular Angry Birds. Other titles are expected in the coming weeks and months, including Angry Birds Seasons and Angry Birds Rio, as well as two titles from Namco, Pac-Man CE and Galaga.

No doubt, Roku is using the gaming capabilities as a way to differentiate itself in the set-top market, where it is facing a stiff challenge from Apple TV, which retails for $99, but lacks the broad streaming capabilities and the gaming functionality that the Roku 2 will provide.

Roku also beats Apple TV in terms of size. While Apple's new set-top box is pretty small, the new Roku is even more minuscule: it measures in at 3 inches wide and about an inch high.

As before, Roku will maintain three different models. The entry level HD will retail for $59 and support 720p HD video. Stepping up to the XD at $79 will gain 1080p video, and enhanced 1080p playback support and Dolby 5.1 surround sound for Netflix videos.

The top of the line XS will cost $99, and carry many of the same features as the XD, but includes a USB port and wired Ethernet capabilities. In addition Roku will include the Bluetooth motion remote and a copy of Angry Birds at no additional cost. All units will be available through Roku's retail channels when it launches later this month.

In addition to the gaming support, Roku's content catalog will expand to nearly 300 channels. Additional channels will be coming soon from Facebook, AOL HD, and FOXNews.com, it said.

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