Yusuf Mehdi, senior vice president of Microsoft's Interactive Entertainment Business affirmed that Microsoft is witnessing an unmistakable transition of the Xbox 360 "from a gaming console to an entertainment console." From Engadget:

In fact, he stated that 18 billion (yeah, with a "B") hours of entertainment have been consumed on Xbox, and while Netflix is obviously the driving force, it might not be that way for much longer. He was quick to claim that Sony's PlayStation 3 "isn't as good of an entertainment console" -- something he feels that "everybody knows" -- and insinuated that the next-generation Xbox will stick to "big and premium." In other words, don't expect Microsoft to kick out a $50 Roku-style content box. Mehdi wants to ensure that the future of Xbox enables voice control, interactivity, and "other stuff that's big and beautiful."

 Microsoft talks plans for premium content production