Microsoft May Be Set to Announce Subscription TV Service at E3

Once upon a time, Microsoft had a service called Xbox Live Diamond.  It was a short-lived, and rather pitiful, discount card program for Xbox Live Gold subscribers.  Sounds like we might be getting a new take on Xbox Live Diamond that could actually offer some true value.  The Xbox 360 already offers IPTV funtionality with Mediaroom integration for interested service providers, but the idea of offering television service independent of the service provider, directly over the Internet, is potentially game-changing.  Question is, will Microsoft be able to get enough content providers to sign on and how will service providers react to be being pushed even farther toward being dumb bit providers?

Microsoft has been in talks with media companies to produce the  TV service for its Xbox console. Microsoft is proposing a “virtual cable operator” which will be delivered over the Internet and charged with a monthly fee. The software maker has also suggested that cable companies could use the Xbox as a device to authenticate existing cable subscribers to watch shows and interact with their Xbox LIVE friends. Microsoft offers a similar service in the UK where Sky customers can use their Xbox LIVE avatars during sporting events. Xbox LIVE Diamond subscribers will likely be charged a premium subscription cost (think monthly) which includes access to the Xbox LIVE Gold features and streaming TV.