The next Xbox will have the capabilities of a set-top-tv box and require an always-on internet connection, suggest multiple media and internet sources.
The Verge has been told by several contacts the new Microsoft Console will not only have the media and entertainment capabilities of the current generation, but be able to access TV and Cable channels.
This jibes with earlier reports about "Xbox TV", and the possibility that Microsoft would release the Xbox in two SKUs, one for media and one with support for hardcore gaming.
While the Verge has now ammended that report to say the set-top Xbox would appear after the main console debut, rather than alongside it.
Microsoft has also offloaded its Mediaroom IPTV business to Ericsson, stating it wanted to focus its TV efforts on the Xbox.
Kotaku's Superannuation has been doing some rummaging, and has come up with another bundle of sources that indicate Microsoft's TV business is heading to the Xbox.
This research suggests that the ball was set in motion by a startup called Video Surf, now Microsoft's Video Cognition team at its Interactive Entertainment Business.
"Our vision is to radically change the way we watch TV," says Video Cognition’s Senior Software Development Engineer Lead Eran Borenstein on the project's Microsoft Careers page.
Video Surf wasn't exactly an unknown quantity when Microsoft picked it up - the startup already had a deal with Verizon to have its software preloaded on all its LTE/4G smartphones.
"Now as the Video Cognition team, we’re excited to marry our capabilities with Xbox LIVE and drive even more innovation and value," said Video Surf co-founder Eitan Sharon.
There's more to this tech than meets the eye though, and it seems to connect with Microsoft's Kinect.
"As we enter the era of Natural User Interface (NUI) with full interaction for TV and computers, our aim is to streamline the way viewers search, consume, and share content, minimizing the time spent searching for programs, while maximizing the viewing and sharing capacities," says Borenstein.
The Verge report above says its sources make the incredible claim the Xbox TV will work with the new Kinect so closely that if a viewer turns away from the screen, video will pause.
This might be what Borenstein means by Natural User Interface - motion control.
The idea of the next Xbox requiring an internet connection have resulted in quite a bit of controversy.
Yesterday it was revealed that Creative Director Adam Orth had left Microsoft after his remarks on the subject of always-on consoles drew enough criticism that the company was forced to issue an apology.
With 19 million in the US without even the option of broadband internet, it's a sore subject for many, and another 100 million who do have access choose not to subscribe.
The idea that the device requires an internet connection for media and intertainment apps rather than digital rights management might draw less fire from critics.
But Microsoft could wind up turning the tables on Sony, who last generation surprised many with the PS3's devotion to entertainment and media.
With the PS4 putting the focus on social media and the cloud, Microsoft could make major gains with those who use their console primarily for entertainment.