Microsoft TV in the Works?

The company is reportedly negotiating with networks and premium services, preparing to launch its own streaming service.

Microsoft is planning its own streaming TV service to compete with Netflix, Apple, Google, and a host of other companies, according to sources.

 Two people "familiar with the plans" told Reuters that Microsoft is in licensing talks with several TV networks to stream content over its devices, presumably the Xbox 360 and Windows 7 mobile phones.

Reuters' sources say that while Microsoft TV won't be available for another 12 months or so, the initial content licensing talks have been "productive." Microsoft plans to directly sell individual high-end channels such as HBO and Showtime, and already has a deal with ESPN.

Microsoft may have a leg up on the competition given the popularity of its hardware. As of mid-November, the Xbox 360 outsold both the Nintendo Wii and Sony's PlayStation 3 for the fifth month in a row, and the body-motion sensitive Kinect sold 1 million units ten days after launch. Xbox Live clocked 23 million Gold subscribers in June 2010, and given the console's impressive sales figures, that number has likely ballooned.

When it comes to streaming media subscriptions, content is king, and selling premium channels such as HBO and Showtime will not only entice users tired of Netflix's subpar content, but also allow Microsoft to continue featuring Netflix Instant Watch on its Xbox consoles without jeopardizing Microsoft TV subscriptions.

Other subscription TV services are doing fair. Analysts estimate that Apple TV will move 1 million units per quarter. But other companies aren't doing so hot. Google TV has had many struggles with content providers to get decent material on its streaming media box. Likely due to a lack of engaging goods and its relatively high price tag, Google TV's future is uncertain. It is already seeing price cuts as big as 25 percent -- a bad sign.

But since Microsoft already has the hardware and probably won't make a separate device for streaming TV, its plan to enter the fray could prove successful.