First-order effects

• If the service debuts at E3 as reported, Xbox LIVE members gain a new paid TV tier on the console, turning the device from a game-and-video-rental box into a live-television endpoint overnight.
• Microsoft's E3 stage becomes the negotiating table: any TV tier shown publicly signals to broadcasters and cable distributors that the company is ready to sign carriage deals.

Second-order effects

• A console-based TV subscription puts pressure on cable and satellite set-top boxes, forcing pay-TV carriers to decide whether to partner with Microsoft or treat the Xbox as a competing gateway into the living room.
• The just-closed Skype purchase gives Microsoft a communications asset that pairs naturally with a living-room media hub — video calling and social features become plausible differentiators for a TV tier that pure streaming rivals lack.

Third-order effects

• If the pattern holds, consoles stop being sold primarily as game hardware and start being sold as subscription platforms — the flywheel where each attached service (LIVE, TV, music, communications) raises the value of the last one.
• A successful Xbox TV tier accelerates the industry-wide unbundling of pay television, pushing carriers toward app-style distribution on third-party devices and drawing regulator attention to carriage and licensing terms.