Microsoft will be celebrating the holidays on Xbox Live by announcing that they will be doing what they do best: selling stuff at a discount. Xbox 360 owners will have the chance to spend, spend, and spend Microsoft Points on a variety of content that will be marked down for the holiday season.

First off, they plan to help get your avatar into the holiday spirit by giving you the chance to purchase a variety of holiday gear to dress up your avatar. They will also be releasing some Disney Classics gear on Christmas Eve that will be the highlight of the gear to be released for the holiday season.

Next, because the deal of the week promotion has been so successful, the company will continue it during the holiday season with price reductions on some recently released content, including the Lips Cold Play track pack which will go for 200 points, followed by Shadow Complex for 800 points, and the ever popular Maw for 400 points.

If that isn’t enough, new download content is coming, as well. Alien Breed will get Evolution 1, which will drop for 800 points on the 16th, and the brand new expansion for Trails HD with the Big Pack, which will arrive on the 23rd for 800 points and will feature 35 new tracks. Also, don’t miss the Forza 3 holiday car pack, which just arrived on the 8th for 400 points.

If you have been following the Games on Demand offerings, some new additions are on tap for the holidays, including Crackdown, Bolt, Viva Piñata: Party Animals, Lost Planet Colonies Edition, Devil May Cry 4, and the first Gears of War. All of these will arrive over the next three-week period.

If all of this isn’t enough, Microsoft will be running special one-day deals on all types of content, including games, movies, add-ons and themes as they ring in the New Year from December 18th to the 31st.  No word yet on what kind of deals to expect, but you will want to make sure that you have some points to spend, as our sources say there should be some excellent one-day values.

While we didn’t hear Microsoft use the word “free” any place in the news about what we have to consider as their holiday sales promotion, we think it is an attempt to pad the bottom line for both the company and publishers/developers before the end of the year. If you missed the chance to buy some of these titles or you are looking for a deal, it sounds like Xbox 360 owners are covered between now and the end of the year.