Microsoft is reportedly in talks with satellite broadcaster BSkyB to try to close a deal whereby its new Xbox One video game console would be sold in the UK alongside a Sky subscription package.

Update: A spokesperson for Sky has denied the report:

“We have no plans to sell Xbox hardware as part of a Sky subscription. We have a longstanding partnership with Microsoft by which we distribute our content via Sky Go and NOW TV on Xbox. We look forward to continuing to work with them as part of our commitment to giving our customers more ways to watch Sky programming in addition to their Sky+ HD box.”

MCV reports that a move “may already have been signed off” and that an announcement could be made as early as June 10, when Microsoft holds its annual press conference at E3 2013.

It’s unclear exactly how this partnership would work, however. The new Xbox One isn’t a cable box, despite the plethora of voice-enabled controls demonstrated during Microsoft’s initial unveiling in Redmond last month.

It means that cable TV subscribers, at least in the US, will need to plug their existing hardware into the back of the Xbox One through a HDMI cable. A similar setup is expected for players who wish to take advantage of the service in the UK.

No DVR functionality at launch

The decision also means that the Xbox One won’t be able to offer any DVR functionality. Todd Holmadahl, Corporate Vice President for Xbox’s Interactive Entertainment Business and Incubation, has since confirmed that Microsoft is working to add this post-launch, however.

Sky would, therefore, have to sell the Xbox One as a companion device to the various Sky boxes it already issues to its millions of satellite TV subscribers. The workaround – which the Xbox 360 utilizes now – could be to deliver the content through a dedicated app for the Xbox One.

Either way, there’s a possibility that Sky could sell the Xbox One at a greatly reduced cost, effectively subsidizing it as part of subscribers’ monthly fee. That would be a huge boost for the system, given that the initial release price is expected to be pretty high – it’s priced as £600 (roughly $926 USD) on Amazon.co.uk at the moment – which will likely discourage some players still content with their Xbox 360.

Still rumors, for now

Microsoft is yet to confirm that these discussions are taking place. The company has shown an interest in launching a subsidized console in Europe before, however, and also described the approach as “pivotal” for its business strategy moving forward.

The reveal event for the Xbox One had a heavy emphasis on live TV and multimedia content. This was emphasized by its new partnership with the NFL, as well as the reveal of its own TV production studio – which is already working on an adaption of the hugely popular Halo franchise with Steven Spielberg.

Rumors have been circulating for some time that Microsoft could launch the Xbox One at two separate price points, including a subsidized model with either an Xbox Live subscription or a deal with users’ local cable or satellite TV operator.

Microsoft has promised to focus on the new games being released for the Xbox One at E3, but who knows, perhaps they’ll detail the price and some attractive subscription offers too.