Whether it’s through the Zune Marketplace or Netflix, you can already watch movies and other video content on Microsoft’s Xbox 360 console. But a new story says the company is looking to expand its offering to what could end up turning Microsoft into your cable company.

From Reuters:

The maker of the Windows operating system has proposed a range of possibilities in these early talks including creating a “virtual cable operator” delivered over the Internet for which users pay a monthly fee.

Other options include using the Xbox to authenticate existing cable subscribers to watch shows with enhanced interactivity similar to how pay TV operators have sought to do over the Web, said these people.

Microsoft is also exploring the possibility of creating content silos and selling more individual channels directly such as an HBO or Showtime.

Whatever this service ends up being, the insiders tell Reuters it is likely to be a year away from becoming a reality.

Microsoft in talks for new TV service -sources [Reuters via Kotaku]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.