Report: Zune to become streaming video service

Having established partnerships with both Netflix and Hulu on the Xbox 360, Microsoft might be gearing up to compete with them. Zune-xbox

The company is reportedly planning to roll out a streaming video service of its own under the Zune brand later this year.

The Daily – Rupert Murdoch’s daily iPad newspaper – reports that Microsoft is tired of seeing other subscription services earning money that it could potentially pocket, which is prompting the move. But it’s a little light on details – such as whether the service will carry an additional charge or be folded into the current Zune monthly fee of $15.

It’s also possible it could be folded into the annual Xbox Live service fee. Microsoft did recently raise that from $50 to $60, giving it a little more wiggle room to add features.

Microsoft declined comment, based on its policy of not commenting on “rumors or speculation.

At present, Xbox Live users can download videos from the Zune service for an a la carte fee to watch them – something fewer and fewer people are doing, as streaming becomes more widely adopted.

40 percent of all Xbox activity is spent on activities other than games. The average console is used 30 hours per week for streamed video and audio programming – and the number is growing fast.

At E3 this year, Microsoft announced plans to begin streaming Live TV through the Xbox 360, but failed to give many details – including who it planned to target as partners.

“We’re reaching out across the board with everyone,” says Dennis Durkin, chief operating officer and chief financial officer for Microsoft’s Interactive Entertainment Business. “Content partners have seen what we’ve done with Canal Plus and they want to see how they can leverage our infrastructure. … We’d like to see more live TV and local TV. We’re doing everything we can to strike those partnerships.”

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