The new project reportedly ties in Xbox Kinect for control as well.
Ever since the launch of the latest generation of game consoles, we've been hearing rumors of an IPTV solution that would allow Xbox users to scroll up live television channels on their systems without subscribing to an additional cable service.
Leaks in the past, as well as some direct information from Microsoft, has revealed that indeed an Xbox TV service is in the works. The inclusion of ESPN to the Xbox seems almost like a test of the system's capabilities in this area.
According to the folks at ZD Net, the new service will be going into testing later this month and will be available before the end of this year. Sounds like perfect timing for a big E3 reveal.
Source: ZD Net