Microsoft is looking beyond Windows Media Center’s TV support.

NOV. 29, 2010 • The Reuters news service reports that Microsoft Corp. is in early discussions with media companies to license their TV networks for a new online pay-television subscription service to be distributed through devices such as, but not limited to, the Xbox 360 video game console. Microsoft has proposed a range of options including creating a “virtual cable operator” delivered over the Internet for which users pay a monthly fee. Another possibility is using the Xbox to authenticate existing cable subscribers to watch shows with enhanced interactivity. The company is also said to be exploring the creation of more content silos on Xbox Live and selling more individual channels directly such as HBO or Showtime.

Impact: Both Sony and Microsoft got into the video game business as a way to get a box into the living room that would deliver multiple products and services, far beyond games.  So far it really hasn’t worked, even as services like Netflix and Hulu are widely available on console systems.  Games alone are not enough to support Microsoft’s foray into the game hardware market so it is not surprising to see them continue to look at many new options to make the investment pay off.