Microsoft Adding Comcast, Verizon Pay-TV Services to Xbox Live

Microsoft (NASDAQ:MSFT) will offer online pay-television service from Comcast (NASDAQ:CMCSA) and Verizon (NYSE:VZ) through Xbox Live, using the game console in place of a set-top box. Microsoft is also in talks with nearly two dozen providers of music, movies, TV shows, and sports in Europe and the U.S., and could announce an expanded Xbox Live streaming service as soon as next week. By Christmas, Microsoft plans to add their Bing search engine to the Xbox and set up its Kinect controller’s voice recognition to allow users to sift through shows on the Web.

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“We all know the frustrations of using guides and menus and controllers, and we think a better way to do all of this is simply to bring Bing and voice to Xbox,” Ballmer said at a developers conference. “You say it, Xbox finds it.” Microsoft is currently working on content deals with Time Warner’s (NYSE:TWX) HBO, Sony Pictures Entertainment’s (NYSE:SNE) Crackle streaming service, NBCUniversal’s (NASDAQ:CMCSA) Bravo and Syfy channels, and Amazon’s (NASDAQ:AMZN) Lovefilm UK.

Microsoft’s contract with Comcast’s Xfinity TV service and Verizon’s FiOS would require users to prove that they already have a subscription to those services in order to view their offerings via Xbox. Users will also be required to pay $60 a year for the Xbox Live premium service, available on Xbox 360 consoles, which also play DVDs and video games. Xbox Live currently allows for multi-user play over the Web, and users can add subscriptions to Netflix (NASDAQ:NFLX) or Hulu (NYSE:DIS) for streaming content, and access their pay-TV subscriptions through AT&T’s (NYSE:T) U-verse.

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Microsoft has also been integrating social networking features into Xbox live that allow users to chat with each other while watching shows and movies. As of June, roughly 35 million people around the world subscribed to Xbox Live, spending an average of 60 hours a month using the service’s various features. In comparison, Comcast had 22.5 million pay-TV customers as of June 30, while Verizon FiOS had 3.8 million. By putting their services on more devices, cable and satellite TV providers are hoping to stem defections by making their services easier to watch.