Microsoft is never the one wanting to be left behind when a new technology emerges. Streaming video is no different. With the current offerings from the Zune marketplace, and competitors Hulu and Netflix killing them in market share, something had to be done. Microsoft's lack of a native streaming application on the Xbox, and a thin library of downloadable movies has led them to release a new Zune branded streaming video service.
According to The Daily, Microsoft is set to release a new subscription based video service for the Xbox 360 to compete with Hulu and Netflix. Still running under the Zune brand, it will offer a much larger library than what is currently offered for a single monthly subscription fee.
Pricing and library contents are still under wraps. Currently, Microsoft offers an "all you can eat" music subscription for the Zune, and rumors are that they may offer something similar with the video streaming. Another interesting rumor, which would make sense, is that the subscription would extend to multiple devices: Windows Media PC, Windows Phone 7 as well as the Xbox 360.
Microsoft currently offers movie downloads, but not native streaming. The new system would allow users near instant access to movies. The Xbox Live library is relatively thin compared to Netflix or even the Zune branded library. Merging the two seems like a logical decision.