Report: Microsoft pitching Xbox 360 for new TV service; a la carte on the menu?

Add Microsoft and its Xbox 360 game console to the list of devices and players attempting to get into the over-the-top delivery game in a big way. Reuters today is reporting that the computer giant isMicrosofts Xbox 360 in TV play talking with TV networks as it weighs entering a sector that already has bloodied the noses of some of the biggest names in the tech industry, including Google, Apple and Amazon.

Among the options Microsoft is floating, an Internet-based cable operator that offers subscriptions, and a TV Everywhere play through the Xbox 360 with existing cable operators.

Microsoft is hedging its bets, sources told Reuters, considering a plan that would offer consumers individual channels like HBO, much as it currently provides ESPN over Xbox Live. The a la carte option is one that consumers have been clamoring for, but it's been an anathema to the pay-TV industry, which has held onto its bundling strategy for decades. That's attractive to programmers who are worried about increasing competition eating into their profits, and who see the possibility of new ad revenues from Internet-based services that would alow them to better target select consumers.

One other advantage Microsoft and its Xbox 360 have, however, is the fact that it already is in millions of households; consumers wouldn't have to add yet another box, a la Google TV, Apple TV or Boxee Box.

"I've been fully expecting this to happen," said Colin Dixon, a senior partner at The Diffusion Group. "Microsoft has been repositioning the Xbox for awhile."

But, don't look for a new pay-TV service anytime soon, though, the sources say that while talks have been productive, any new platform is at least 12 months away.

While not a major threat, yet, over-the-top delivery of content has been gaining traction. More consumers are more aware of increasing options for getting premium content over the Internet. While cable operators say they don't believe cord cutting is a major threat to their business, the industry has seen steady erosion in subscriber numbers since 2008. In the past two quarters alone nearly 1.5 million customers have cancelled cable subscriptions.

For more:
- see this Reuters article

Related articles:
Telus offers Xbox 360 as IPTV set-top box
AT&T launches U-verse service to Xbox 360

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