Spain’s Telefónica has reportedly signed an agreement with Microsoft to turn the Xbox console into a TV set-top-box for the distribution of TV services.

The president of Microsoft Spain, Maria Garaña, acknowledged that her company has reached an agreement with “a Spanish operator” to develop the project that would be up and running within a year. Further details will be announced over the next few weeks.

“TV has been left behind because it had separated from the rest of the digital ecosystem”, she said but was confident that television will be in the limelight again as long as TV interacts well with other equipment (computers, mobiles…).

The use of Xbox 360 as a TV set-top-box would allow users to hold play, rewind, record and benefit from the hard disc integrated into the console, adding new services. The deal will enable Microsoft to enter the IPTV market in Spain with Telefónica leading the business with more than 700,000 subscribers. For its part, Telefónica will be able to break into new devices and a new market where Microsoft ranks second after Nintendo and ahead of Sony with a turnover in Spain of €1.245 billion last year. In addition, Telefónica, with this deal, will not have to develop its own technology, will save maintenance costs of its platform and will profit from Microsoft economies of scale.

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