We’ve discussed in the past on how Microsoft is transforming their popular Xbox gaming console into a home entertainment gateway, which includes a growing number of video options, including OTT. AT&T has already enabled the Xbox to be a U-verse IPTV set-top-box. Word now comes that Microsoft is in talks to expand its Xbox set-top-box footprint to possibly include Comcast, Verizon FiOS, or maybe both.

Microsoft already revealed plans for Xbox TV (although the details were lacking) earlier this year. There were suggestions that they may try to go it alone with their own TV service, kind of like a Microsoft version of Hulu, delivered to the Xbox. But the latest rumors point to a more traditional partnership with existing pay-TV providers, utilizing the Xbox platform as an integrated STB with say Xfinity TV or FiOS.

For service providers, the Xbox may look appealing. There are over 50 million of them already in homes (although it’s not entirely clear if all of those would be capable as a STB), so you could conceivably do a point-of-purchase transaction for Xfinity of FiOS in millions of existing homes. You may even be able to save a truck roll.

Add the interactive nature of the Xbox and you could do some creative things around integration with its existing features and services. Verizon didn’t confirm anything, but seem to be hinting at it with this blog post. Stay tuned.