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Microsoft is thinking inside Xbox

Conglom going directly to the source

After relying on Netflix, Hulu and ESPN for much of the TV programming that appears on its Xbox 360 videogame console, Microsoft is going directly to the source for its next lineup of shows.

The company is expected to unveil, as early as this week, new deals with cable, satellite and Internet TV providers as well as individual channels including Comcast’s Xfinity TV, Verizon’s FiOS TV, HBO, NBCUniversal’s Bravo and Syfy and Sony’s Crackle that will provide programming to Xbox Live.

Ultimately, “dozens or hundreds of additional video content suppliers” are expected, Microsoft CEO Steve Ballmer said at a meeting with financial analysts in Anaheim, Calif., last month.

Shows would be available through live streams and VOD, sources at Microsoft confirmed to Variety. Not all channels from the cable or satellite TV providers would be offered, however.

The rollout isn’t expected until mid-November, when Microsoft will relaunch the Xbox Live interface with new features.

Microsoft is eager to up the number of content deals it has for Xbox Live as it looks to turn the Xbox 360 into an all-in-one set-top box that can access all forms of entertainment, not just games.

Company execs began openly discussing their desire to bring live TV to the console in the U.S. in May, during Microsoft’s press conference at the Electronic Entertainment Expo (E3). At the time, the company revealed overseas deals with Sky TV in the U.K., Foxtel in Australia, Canal Plus in France and Telus in Canada, which already offer live TV to console owners in those territories.

“This is the year that live television comes to Xbox 360 as we partner with leading television providers, both here in the U.S. and around the world,” Marc Whitten, Microsoft’s corporate VP of Xbox Live, said at the time. “This is our vision of the future of television.”

Since then, Microsoft has given demos on how the incorporation of Bing into Xbox Live and the use of Kinect’s voice controls would enable users to search for a specific title of a TV show, movie, game or music artist and find all the ways to access the content for free or through purchases from various sources — whether it’s stored on the console (through its built-in hard drive), available from content providers or through retailers.

But Microsoft first needed to lock down more digital-rights deals with content owners to pull that off.

With 55 million Xbox 360s in consumers’ homes, pairing up with Microsoft isn’t a tough decision to make, especially as the emergence of more platforms enables TV studios to wring more revenue from the distribution of their shows.

At the same time, cablers and satcasters have been looking for ways to go mobile in order to keep more of their customers from fleeing to online-based VOD services.

By adding their services to consoles like the Xbox 360, TV providers believe they can put programming back in front of gamers with the device they’re already using rather than hoping they switch to other set-top boxes.

Xbox Live has 35 million members who pay to access content, versus Comcast’s 22.5 million and Verizon’s 3.8 million for FiOS TV.

But Microsoft also wants to promote its console as a broadcaster of live TV, though it will have to convince consumers about the merits of accessing such programming that way as it rolls out.

In most cases, Xbox 360 owners already have their consoles next to a cable or satellite TV set-top box, with both connected to the same TV set.

And Comcast and Verizon’s FiOS TV would require users to prove they are paying subscribers before they can access the services on the Xbox 360. Last year, AT&T made its U-Verse channels accessible in such a way. Xbox Live viewers of ESPN 3 content must also prove they already are pay TV customers.

But Microsoft wants to borrow the interactive elements that have proved popular for ESPN’s sports broadcasts with airings of others shows — social networking features like chat, group viewing and polls.

A Microsoft spokeswoman declined to comment.

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