Ballmer Teases Xbox TV

At the BUILD conference earlier this week, Microsoft (NAS: MSFT) CEO Steve Ballmer teased the new Xbox TV service, which will allow viewers with the gaming console to watch live TV programming. But it's not clear which cable networks will be distributed through Xbox TV, or if the content will only be available to authenticated cable and satellite subscribers.

Microsoft is looking to differentiate itself by supplying Xbox owners with an advanced programming guide that would incorporate Web video content from Netflix (NAS: NFLX) and other suppliers, in addition to live TV. And while the company will also use its Kinect technology to let viewers use hand gestures and voice commands to navigate content, the demo Microsoft ran during Ballmer's presentation at the conference failed when the company attempted to run a voice-based search to find episodes of hit NBC comedy The Office.

"It's a good thing that's shipping for Christmas," Ballmer said after the demo failed.

Microsoft could shake up the pay-TV sector if it were able to strike licensing deals with major programmers such as Walt Disney (NYS: DIS) or Viacom (NYS: VIA) , which would allow it to stream ESPN, MTV, and other live cable channels to any Xbox owner, regardless of whether the owner is also a cable or satellite customer. But in the near term, it's doubtful that major cable networks would allow Microsoft, Apple, or another virtual cable operator to carry their networks because of the terms of their licensing deals with cable and satellite providers that limit the amount of content that can be distributed online.

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