UPDATE: Sky/Xbox One rumours quashed

Sky spokesperson: "We have no plans to sell Xbox hardware as part of a Sky subscription"

Rumours emerged from trade magazine MCV

UPDATE: A Sky spokesperson has said: “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. ”

Sky television viewers may be offered Xbox One consoles as part of their package later this year, according to speculation surfacing at the videogame industry's largest gathering in Los Angeles.

Microsoft is understood to have been in talks with the broadcasting giant and is keen to expand on the current offering which allows Sky TV services to be viewed on Xbox 360 consoles.

According to the trade magazine, MCV, the deal – on which Microsoft is refusing to comment – could be announced as early as Monday night at the E3 conference in LA.

It is not known whether the device would work as a replacement set-top box or work alongside the existing Sky+ HD device.

But it is believed the console would be offered at a reduced cost, allowing Microsoft to shift more consoles than its nearest rival Sony which is preparing its PlayStation 4 for launch.

The potential move by Microsoft will be seen as major ammunition in the multi-million pound next-generation console war. It has already announced that Xbox One will allow for TV recording.

A Sky representative told the website Pocket-link last month: “We enjoy a long track-record of innovating with Microsoft on the Xbox platform and will explore any future opportunities offered by Xbox One.”

Offering Xbox consoles to subscription customers is not without precedent. Gamers in America were able to get a reduced price Xbox 360 if they took out a two-year subscription to Xbox Live.

Microsoft boss Steve Balmer and Entertainment Studios boss Nancy Tellem have been meeting Hollywood executives to sign exclusive television content for the console in a move that mirros attempts by online TV and film subscription services Netflix and Lovefilm.

A live action Halo series will be exclusive to Xbox One.

Responding to the rumours, A Sky spokesperson said: “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.”