Whilst the divide between gaming console and media center became almost non-existent in this current generation, it's no surprise that Microsoft will blur the line even move with their next Xbox console. Sources close to Microsoft have revealed to The Verge that the new console will have TV functionality close to Google TV.
Apparently, connecting the console to a cable connection will allow users to use an overlay to access programs from content providers but will require an online connection to access TV signals. Could this be where the "always on" rumors have come from concerning the next Xbox? There's also proposed Kinect support to tie in with the media functionality.
None of this is really surprising; a few years ago I could see at a glance which of my North American friends were using their Xbox because they were all using Netflix. Consoles have become the almost ubiquitous media device in a living room. The less boxes I have plugged into my TV, the better and if it means Microsoft may ditch or at least overhaul their woeful app store, then all the better.