Although Microsoft has received its share of criticism for its responses to challenges in the mobile arena from the likes of Apple and the Android operating system, most agree that the company’s Xbox gaming system remains an unquestionable success. However, a new report claims that the company is looking to take one of the device’s primary features and break it off into an entirely new product: a set-top box for streaming video.

Citing inside sources familiar with the matter, the Wall Street Journal reports(Opens in a new window) that Microsoft has been working on a set-top box that would ditch the Xbox’s gaming features and focus solely on streaming video content into consumer’s homes. The first whispers of such a device came late last year, as an earlier report in The Verge indicated that Microsoft’s new set-top might debut sometime this year. According to that report, in addition to television and film content, the set-top box would also focus on casual gaming. The new product would also supposedly offer software that would allow television manufacturers to add the new Microsoft video streaming service to smart televisions.

Such a service could put Microsoft more firmly in competition with other streaming services such as Roku, Boxee, and Apple TV, as well as software-only services such as Netflix. Such a move could also allow Microsoft to possibly reach consumers before the debut of Amazon’s rumored set-top box. Amazon’s device is expected to launch some time in the fall, so, if the reports coming out of Seattle are accurate, Microsoft has a very small window in which to operate if it hopes to beat the e-commerce giant to market.

And while some may question why Microsoft would decide to fork its successful Xbox content delivery platform into a new product, the answer most likely lies in pricing. The Xbox 360 gaming console typically retails for $199 to $299, while most set-top boxes dedicated to video streaming generally sell for $100 or less. Opening up Microsoft’s video-streaming service to consumers at a significantly lower price point could ultimately boost the company’s market share and competitive position as the battle to capture streaming video customers heats up. 

Microsoft, meanwhile, is scheduled to show off its next-gen Xbox at a May 21 event in Redmond.