Microsoft is planning to leap back into the battle for American living rooms with a new TV service, sources tell Reuters. The company has held talks with TV networks about creating a TV service to be delivered through the XBox console, establishing a "virtual cable operator" that would charge a monthly fee for access and provide stiff competition for cable companies, the sources say.
Microsoft, which isn't expected to unveil its TV service for another year, is also reportedly looking into creating programing packages for customers, and using the XBox to make TV viewing more interactive. The plans would pit Microsoft against TV efforts from Google and Apple, although analysts note that having the "Trojan horse" console already in millions of homes could give Microsoft the edge. (Read more Windows stories.)