Even though Microsoft Corp.'s Xbox game console and Xbox Live video game service were primarily designed for gaming and gamers, the platform is slowly, but surely becoming a rival to Amazon, iTunes and other media services. According to the company, Xbox Live users spend more time on consuming media rather than on gaming.

"What we're seeing is that people are turning on the Xbox to play games and then keeping it on afterwards to get other types of entertainment," said Yusuf Mehdi, chief marketing officer of interactive entertainment business at Microsoft, in an interview with LA Times.

Microsoft claims that households now spend an average of 84 hours a month on the Xbox Live online service playing games, watching videos and listening to music, up 30% from a year ago. At present, over half of these 84 hours are spent on music and videos and less than 50% is spent on gaming. An average family spends 150 hours a month watching TV, therefore, Xbox Live has a lot of room for further growth.

With Xbox Live becoming a competitor for various content selling/streaming/renting services like Apple iTunes, Microsoft has to show content owners that its service is better than others and that people use the company's innovations like Bing Voice or Kinect to find and watch content. For Microsoft, it is critical to make Xbox Live popular among content owners as the platform is available or going to be available on its Windows operating system for PCs as well as Windows Phone OS for smartphones.

Moreover, in order to make Xbox Live even more popular, Microsoft will inevitably have to either substantially slash price on its Xbox 360 console to dramatically increase installed base, or introduce a special set-top-box supporting Xbox Live in rooms not equipped with X360.

Finally, Microsoft will have to offer a better platform than its competitors with more content from more providers and in broader number of countries.

Tags: Microsoft, Xbox, Xbox Live, Windows, Windows Phone, HDTV