Microsoft may be looking to work with cable provides, not against them.
With Netflix, Zune, and Hulu already on Xbox Live and YouTube on the way, the days of gamers needing cable TV seem to be drawing to a close. However, some sources suggest that Microsoft is not willing to write off the cable companies just yet. In fact, Microsoft may be gearing up to make the Xbox 360 a de facto cable box for Verizon FiOS and Comcast. Sourcing from existing cable companies may be how Microsoft plans to provide content for the upcoming Xbox Live TV.
Similar arrangements with Sky TV already exist in Western Europe, but this would be the first time the 360 could independently access cable content in the U.S. The Xbox 360 can already work with AT&T's U-verse digital TV service, so this move would hardly be unprecedented. Unlike the proposed Comcast and Verizon connections, the U-verse connection only works in conjunction with a DVR or primary cable box. Since the 360 lacks the coaxial connections necessary for cable, it is not clear how cable content would arrive on the console, although streaming is a possibility.
While Microsoft may end up embracing cable as one of its many TV services, it has no plans to abandon its other markets. Other reports suggest a possible Hulu acquisition and built-in Windows functionality in Samsung TVs.
Come this Fall, Xbox will possess at least four ways to watch TV without the use of cable, so skeptics may question whether or not Microsoft really needs to integrate this functionality. For people who use Verizon or Comcast, though, this could be a good way to save some money on cable box rentals while still enjoying the full range of cable programming.