The long rumored Xbox TV service will make its debut this holiday season, according to Microsoft CEO Steve Ballmer. Set to offer both video-on-demand and live television, Ballmer claims that Microsoft is working with “dozens or hundreds of additional video content suppliers” in order to shore up programming for the service.

Despite an expected launch in less than three months, Microsoft is remaining mum on the specifics for now. No pricing model has been announced, nor has an exact launch date been revealed. No specific content providers have been named either, though Ballmer does note that the service’s live television offerings will feature “news, sports, and your favorite channels.”

Video content is an ever more important feature of modern game consoles, thanks to the efforts of services like Hulu Plus and Netflix (now separate from its disc-based movie and game rentals). Sony, in fact, is working to combine all of its digital offerings under a single banner, Sony Entertainment Network. When asked what will set Xbox TV apart from the competition, Ballmer references both Microsoft’s Bing search engine and the Kinect.

“Having all of that content is right on, it’s fantastic, but it brings a new challenge with it. Certainly 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. You say it, Xbox finds it.”

Xbox TV apparently leverages Kinect’s speech recognition, allowing users to search for programming by voice alone. This news comes just months after rumors of a new video streaming service for Xbox 360’s Zune marketplace. Concurrently, a significant dashboard update is on its way to Xbox 360 this Fall with features that fall right in line with what Ballmer is promising for Xbox TV, including Bing and voice search integration. Though it seems likely enough on paper, whether or not Xbox TV will be a part of the Fall update remains unknown.

Exciting though the prospect of Xbox TV may be, a number of questions remain. If the service (and the Fall Dashboard Update) tightly integrates Kinect, what about 360 owners who don’t own the peripheral? Will an Xbox Live Gold membership be required to use Xbox TV? Most importantly, will the service truly represent a viable alternative to traditional cable television?

Time to tell us what you think!  Would you be willing to pay a second subscription fee for Xbox TV? How important do you think streaming video services are to current game systems?

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Source: CNN Money, Xbox Freedom