Microsoft's tipped to be working on an Xbox set-top box, lower-cost than the standard console and offering movies, TV programs and casual games.
According to The Verge, sources say the device will be released sometime next year. Aimed at casual gamers rather than hard-core players, it would have a much lower price tag than the upcoming Xbox 720, currently expected late 2013 or early 2014.
It would be similar to the Xbox 360, but with more limited options - and presumably, therefore, a bit cheaper. But it will be powered by Windows 8, and designed to boot up and start games almost instantly.
In terms of games and services, it would be able to access Xbox Live services such as Xbox Video, Xbox Music, and third-party applications like YouTube. It could include access to Xbox Live Arcade.
The product appears to be part of a strategy to cover every option, possibly including licensing deals with TV manufacturers, allowing them to build the technology in. Microsoft is also, says the Verge, considering putting a full version of its Xbox Live services onto smartphones.
If true, the rumors would imply that the company's happy to go right up against Apple TV, which so far hasn't faced much in the way of competition. The Xbox set-top box would presumably have a similar $99 price, making it half that of the Xbox 360.
Microsoft's dishing out a standard statement on the Verge's suggestions.
"Xbox 360 has found new ways to extend the console lifecycle by introducing controller-free experiences with Kinect and re-inventing the console with a new dashboard and new entertainment content partnerships," it reads.
"We are always thinking about what is next for our platform and how to continue to defy the lifecycle convention."