At the Consumer Electronics Show (CES) in Las Vegas, Bill Gates used his annual keynote speech to talk about new uses for his Xbox 360 game device. Through a software update on Xbox Live, any current Xbox 360 will be able to act as a digital TV receiver and recorder in conjunction with Internet Protocal Television (IPTV). But to use your game machine as a TV device, you'll have to sign a deal with one of Microsoft's yet-to-be-announced IPTV partners. Companies like AT&T currently provide this service.

The plan is for the new software upgrade to come through these partners by this fall. For those who don't already own an Xbox 360, IPTV providers are expected to lease the machines, like cable companies lease set-top boxes. This means people won't have to put out $400 for a next generation game console come next Christmas.

Gamers will be able to perform the same types of functions while watching IPTV programs as they do while playing online games, which means voice chat and video conferencing are both possible. It also makes sense, since the receiver part of this device will eat up storage space on the 20GB hard drive, that Microsoft or these IPTV providers will bring out Xbox 360s with larger hard drives for storage.

Gamers can already buy HD TV content from dozens of networks like MTV, SpikeTV, CBS and Nickelodeon vis Xbox Live Marketplace. They can also download and rent HD movies from studios like Paramount and Warner Bros. Gamers can also buy a $200 HD-DVD drive to watch next generation movies through Xbox 360.

Once IPTV kicks in, the Xbox 360 will be even more of an entertainment device than it is now. While gaming will always be the focus, one true way to get these consoles into the mass market living rooms is through entertainment like TV and movies. And that's just what Microsoft is doing.