Microsoft mulls streaming TV service via Xbox

Microsoft is in talks with TV networks about using its Xbox Live service to bundle up a suite of TV channels for streaming delivery in the US through the popular Xbox 360 gaming console.

The idea is to target young, male Xbox owners who reportedly spend 40% of their time on the Xbox watching video anyway.

To that point: the Xbox already functions as a video delivery platform: 30 million Xbox Live users use Netflix Watch Instantly through the gaming platform. AT&T U-verse TV customers the option of using an Xbox 360 instead of a DVR. In the UK, Microsoft is working with Sky Broadcasting to extend viewing to the Xbox. And in Australia, pay-TV operator Foxtel is using the Xbox as the linchpin of a low-cost cable package. Microsoft also is working with

But packaging up channels on its own represents a very new direction for Microsoft– a move that will get it into the OTT video game and put it at odds with its pay-TV operator friends. Reportedly, that issue is fomenting a lot of internal debate in Redmond between those who believe the gaming platform should remain primarily that– gaming-oriented–and those who feel that a video offering is a perfect next step for the platform.

Or, it may be more of a hybrid approach. “Microsoft Xbox is very interested in delivering great entertainment to consumers, entertainment in the broadest sense,” Ross Honey, head of content acquisition for Xbox, told AdAge. “From our perspective, gaming and TV are going to coexist.”

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