The Xbox LIVE Games on Demand service launches today with 30 games, including Sonic the Hedgehog and SEGA Rally Revo. (Xbox LIVE Marketplace links) Sonic The Hedgehog is available in the US and Asia, and SEGA Rally Revo is available in Europe, Africa, Australia and New Zealand.

Because Games on Demand is new, here’s some information on how it works.

Games on Demand lets you download and play Xbox 360 games right from your home, with 24/7 access. You’ll be able to purchase games with Microsoft Points or with your credit card. Download times are based on your connection speed and the size of the game, but Microsoft estimates that you can download a typical game on a high-bandwidth connection in 2-3 hours. You can also download game manuals — just locate the game in the web marketplace and select “see game manual”.

Each game is 4-6GB, so you might need a bigger hard drive if you’re planning on downloading a lot of games. You can buy a 60GB LIVE starter pack or a 120GB hard drive as separate accessories. Or, you can delete a game and re-download it again later if you’d like. If you don’t have enough space on your hard drive, you can still buy the game but it won’t download until you clear enough space. If you don’t have a hard drive at all, you’ll receive an error message instead of your game.

As for SEGA, we’ve got two games available today (Which one is available to you depends on where you live)–   Sonic the Hedgehog and SEGA Rally Revo (Xbox LIVE Marketplace links) — with more coming soon.

Happy downloading!

Updated to add territory-specific information for the games.