From LATimes.com:

ESPN has struck a deal with Microsoft to make its content available to users of the software giant’s Xbox 360.

Under the terms of the deal, subscribers to Microsoft’s Xbox Live Gold service will be able to get access to ESPN3, the sports juggernaut’s broadband channel that carries a wide range of sporting events including Major League Baseball and the NBA as well as tennis, golf and college sports.

Subscribers to Microsoft’s Xbox Live Gold service, which costs about $50 a year, will get access to the live sports events at no additional cost, as long as they also subscribe to Internet service through a cable company that provides ESPN3. Those include Verizon, AT&T, Comcast and Cox. This is the first time ESPN has agreed to release the content directly through a device that connects to a television, putting ESPN3 in more direct competition with traditional cable TV service.

Microsoft sees the deal as another way to expand its Xbox 360 beyond games into a full fledged entertainment device, said Ross Honey, a Microsoft executive who handles non-gaming partnerships for the the Redmond, Wash., technology company.
Microsoft has garnered a distinction for having a console with the most intense, gritty and complex games. That reputation, unfortunately, turned off average consumers, and Microsoft has labored in recent years to add features that would appeal to more mainstream players. Among other things, Microsoft added Netflix movie streaming, Last.fm streaming music and Facebook to its Xbox Live online service, which players access through an Internet-connected Xbox 360 console.

“Xbox Live will change the way you watch movies, listen to music and connect with friends,” said Don Mattrick, who heads up Microsoft’s games business.

ESPN had been discussing a deal with Microsoft for more than two years, said John Kosner, senior vice president of ESPN Digital Media. He said his company was particularly attracted by the interactive components Microsoft is adding to ESPN programming, including polls, trivia and the ability to connect with other users rooting for the same team.