• Microsoft's Xbox project has long been seen as not just an attempt to own the console space but also to act as a Trojan horse, putting a device at the heart of the digital living room.

Ever since the first console launched it has come replete with multimedia features - from DVD and CD playback to sharing and extending content from Windows Media Centre and then Windows Vista PCs.

The Xbox has also been at the forefront of the digital delivery world, offering movies and video content over the network.

Today Microsoft announced a new partner to its Xbox Live service in the UK - NBC Universal movie are a welcome addition given the relatively limited range of content the service offers, particularly in comparison to the US version.

But have all the billions of dollars of investment and roll out of content partners been worth the effort?

Microsoft won't say how many movies have been downloaded in the UK over Xbox Live.

Neil Thompson, head of Xbox in the UK, told me: "We are certainly the biggest VOD service in front of the TV in the UK."

But that statement is being based on the number of users of Xbox Live in the UK and the size of the movie portfolio - and the statement doesn't include movie on demand services from Sky because Microsoft don't think they are comparable technologies.

Whatever the figure, the amount of movies going from the service to the screen is likely to be much lower than the video on demand viewings of movies on a subscription service like Sky or Virgin.

But Microsoft is a sizeable player in the European video on demand market, in part because it is a nascent sector.

Nick Thomas, an analyst with Forrester research, told me: "Xbox Live has been pretty smart and slick in building this service and developing the install base."

The difficulty for Microsoft is that the on demand video space is changing dramatically and it is facing increasing pressure from set-top boxes, web-based catch-up TV services and other network-enabled video on demand services.

Mr Thomas from Forrester said: "The onus is clearly on Virgin and Skyto see what they can do with there existing PVR user base."

According to Forrester Research, in the short and medium term, standalone OTT VOD offers will become increasingly available in Europe. OTT VOD basically means devices dedicated to delivering video on demand, such as Apple TV.

And the pressure is not just from hardware manufacturers - the BBC is working with BT to deliver a set of IPTV standards that could pave the way for future services.

Adobe is pushing the Open Screen Project and Yahoo is partnering with TV firms to bridge the divide between the network and the television.

At the moment the Xbox 360 and PlayStation 3 are two of the best solutions to bridge the gap but they could find themselves competing with networked TVs and smarter set-top boxes that come with network connections as standard.

The BBC's deal with Virgin to deliver the iPlayer to a set-top box shows that web applications can find their way to the TV screen without too much hassle for the consumer and without forcing them to buy more hardware.

Mr Thompson said the addition of NBC Universal was a "broadening" of the range of content Xbox Live offers and another step in its evolution into the being the multimedia device of choice.

The success of incorporating Netflix onto Xbox Live in the US - with 1.5 billion minutes of TV and films streamed in just three months - shows just how crucial widening the portfolio and range of viewing options on the service is for the platform.

Yet there is still no sign of the iPlayer or catch-up TV services on Xbox Live, despite the fact the BBC's technology is now on the PlayStation 3 and Nintendo Wii, as well as Virgin.

Mr Thompson said the iPlayer was "not on the slate" and "the question we have to ask is what is unique? A lot of people are accessing it through their PCs".

The very ubiquity of the iPlayer is perhaps making it less attractive to Microsoft.

But Microsoft has a number of advantages over set top box firms, Mr Thomas told me. It has a built-in user base - primarily gamers - and it has a box which can be constantly upgraded through software.

"The ability to upgrade the black box is crucial as this is a fast moving market," he said.

And Mr Thompson hinted the evolution of the Xbox 360 will continue in the coming 12 months.

Source:http://www.bbc.co.uk