Microsoft today unveiled a new update for its Xbox 360 video game system that will bring Sky TV to UK subscribers to its paid-for Xbox Live service.

Sky, the satellite operator 39.1 per cent owned by News Corporation, parent company of The Times, will make a library of content from a selection of its key channels available on demand via broadband.

Griffin Parry, Sky’s Director of On-Demand content, said: “This initiative is designed both for existing Sky subscribers and for people who, for whatever reason, either do not want or are not able to fit a satellite dish to their homes.”

The service is available from today only to Xbox Live Gold members, who already pay £60 per year to play games across Microsoft’s network. Xbox Live subscribers who already subscribe to Sky will have the option of receiving a similar package of on-demand channels via their Xbox 360 console.

The deal is similar to that unveiled last week, at the launch of Microsoft’s Windows 7 operating system. Existing Sky subscribers will have to pay an extra fee to access live, rather than library, content, in order not to damage Sky’s multiroom subscriber base. Multiroom subscribers who are also Xbox Live members will receive the full service for free.

The basic Sky package will cost £15 per month to Xbox Live subscribers who do not already subscribe to Sky TV services. This package excludes premium content such as movie and sports channels.

One curious feature of this latest Xbox 360 upgrade is that, like Windows 7, it excludes Microsoft’s own UK video on demand service, MSN Video, which hosts archive content from UK broadcasters including the BBC and Channel 4.

In addition to TV content, the new Sky package also aims to harness the social networking power of Microsoft’s Xbox Live service. Viewers of Sky programmes, such as live football matches, will be able to invite friends to watch with them.

Friends who are also subscribers can then assemble on a virtual on-screen couch, in a virtual living room to watch the live images shown on the living room virtual TV set.

“This deal gives Sky the chance to get our content to a new demographic,” said Mr Parry. “Our research shows that many Xbox Live subscribers are in their late twenties or early thirties, with no children yet, and no mortgage. A package like this, which is renewed monthly rather than annually, could appeal to a new demographic for us.”

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