The Xbox Live television service has been scrapped.

Reuters is reporting that Microsoft Corporation has put its television streaming services on hold for the time being. For the last several months, the Xbox-maker has been in talks with several television and film networks, discussing the possibility of a TV streaming service for the Xbox 360 console. Now, it appears that Microsoft is going to push television services to the back burner.

Xbox TV would have shared characteristics with Netflix

What’s the reason for the sudden change in plans? Simple. Microsoft believes it would cost too much money to provide quality television streaming. It appears that the price the television partners were asking were simply too high for Microsoft to handle. Odd, considering that Microsoft has some of the deepest pockets in the world. As evidenced by several accounts, the prototype of the Xbox TV system had been constructed, and was ready to be used. The television service would have featured voice control similar to the type already in-use with the Kinect.

Evidently, Microsoft had planned to model the new television service after the successful model they have built around the Netflix application, which allows users to stream feature films for a monthly fee. It was likely that Microsoft had intended to tackle traditional cable service providers head-on, by offering a wide array of television programming at a low cost through its Xbox Live service.

Television streaming likely to become billion dollar industry in near future

Microsoft’s abrupt withdrawal from the television streaming competition comes at a time when other large technology companies, such as Google, are tackling the technical challenges head on. It is surprising that Microsoft would throw in the towel so easily, citing financial reasons as the cause. Should Microsoft choose to sit out on the television streaming business, they risk losing a significant chunk of the technological convergence market. Television streaming will likely turn into a billion dollar industry in the near future. It’s not likely that Microsoft is willing to sit back and watch as its rivals start rolling in piles of money.

Does Microsoft have ulterior motives for this announcement? Is the electronics giant simply adapting a conservative strategy for the time being? Do they think they have the Next Big Thing tucked away in a lab somewhere? Or is the announcement simply a gamble to force the television distribution companies to lower the asking prices? Only time will show whether or not the Xbox television service will return.

For now, consider your plans for watching TV through your Xbox 360 deep-sixed.