Windows Media Center in HDTVs, Xbox Live TV around the corner… dare I say “synergy”?

Microsoft has talked in the past of making the Xbox 360 an ‘all-in-one’ set top device, capable of providing DVR and TV capabilities, but little substance has come from it.

Now, Game Focus is reporting that according to their own trusted source, that an Xbox live TV service will be coming to both the US and Canada by 2011, and that this would work in conjunction with a major telecommunications company, which narrows it down to basically Rogers or Bell.  Users will have access to live TV feeds, recording capabilities and on-demand services as well.

This makes sense when you look at what else has been coming out of Redmond lately…

Game Focus had this to say…

Xbox 360 users in the U.S and Canada will get something similar to Europe’s Sky TV but it gets even more interesting. Our source told us that the Xbox 360 will be used as a digital television set-top box with PVR capabilities in Canada by an important telecommunication company.

Although we can’t verify the rumour at this point, the “by 2011” would make sense.  Microsoft’s new mobile operating system, Windows Phone 7, is due to arrive globally in the fall, and with it their Zune Marketplace.  This means that their Zune services beyond the borders of the US would have to become much more full featured, such as the Zune Pass.  Looking at this in conjunction with the recent USB storage add-on for the 360 console, and it looks like Microsoft may in fact be tying everything together in a neat little bow.

video from Microsoft

It should also be noted that Microsoft did announce on Tuesday plans to make an embedded version of Windows 7 Media Center available to HDTV manufacturers and set top makers.  The embedded Media Center removes all the unneeded functionality of the full Windows 7 operating system, while still providing the full Media Center capabilities.  This also gives manufacturers and providers a wide latitude in customizing the experience, based on what is probably the most versatile and extensible media experience out there.

“With the release of Windows Embedded Standard 7, Microsoft has furthered its commitment to the integration of Windows 7 technologies in the specialized consumer and enterprise device markets by providing OEMs with the latest innovative technologies to differentiate through rich, immersive user experiences and streamlined connectivity,” said Kevin Dallas, general manager of the Windows Embedded Business Unit at Microsoft. “The addition of the Windows Media Center feature in Windows Embedded Standard 7 is driving the set-top box, connected media device and TV markets by providing OEMs with opportunities to develop uniquely branded experiences and service providers with capabilities to explore additional revenue streams with unique content through a centralized media hub in the home.” [from the press release]

Promoting this at the same time as preparing Xbox 360 owners to do the same thing without new hardware costs makes sense in the long term.  Although Redmond has been pushing the ‘3 screens’ and ‘media room’ concepts for a number of years, hardware capable of seamless HD playback (the biggest technological hurdle) is now cheap enough that anyone can buy an off the shelf system.

Finally, this is exactly the kind of play Microsoft needs to make right now.  Their chief competitor in the media space at the moment is obviously Apple, which makes the ubiquitous iTunes software.  Apple’s largest failing is in this space with the quaint and ultimately inadequate Apple TV, who’s hardware can barely deliver HD content at all unless hacked old school style.  Given Microsoft’s combination of a wide range of hardware partners and the millions of Xbox 360s, taking this two pronged approach to move a comprehensive media experience into the home might actually allow them to make a dent in the iTunes content provider space.