According to sources close to Reuters, Microsoft is looking to expand the extra-gaming services available on the Xbox 360 by way of an online subscription-based cable TV service.
Nothing has been confirmed or officially announced just yet, and the service isn’t expected to be ready for at least a year, however Microsoft has apparently briefed some members of the media on the proposed “virtual cable operator” service. Part of the plan would be to offer “content silos” by offering premium channels like HBO and Showtime a la carte, as opposed to part of larger TV packages currently offered by cable providers.
Given the success of streaming content services such as Hulu and Netflix, and the fact that Xbox now offers ESPN programming (if you have access/pay for ESPN 3), a 360-based cable service definitely makes sense. Plus, 360 owners in the UK have been enjoying live television via the Sky Player for a while now, and Hulu Plus, which recently became available for all PlayStation 3 owners, is expected to hit the 360 early next year, so clearly the console and Microsoft are capable of handling such a service. Although, will 360 owners be willing to pay for another subscription fee on top of Xbox Live, Netflix, and Hulu Plus? I guess, as long as it all comes out to less than a similar cable package, but it's hard to say.
Pricing and package offerings are obviously the two biggest questions at this point, but seeing as the service is a year away, don’t expect any answers anytime soon.