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Nancy Tellum, president of entertainment and digital media at Microsoft. Photo via Microsoft.

Microsoft has already been taking steps to turn the Xbox 360 into more than just a video game console. Now, they have an official entertainment studio that’s aiming to supercharge that effort.

Speaking at the AllThingsD D:Dive Into Media event today, Microsoft’s Nancy Tellem fleshed out some details about the company’s new L.A.-based studio called Xbox Entertainment Studios. Tellem, president of entertainment and digital media at Microsoft, is overseeing operations at the studio, where Microsoft is trying to create more interactive content for the Xbox that “will change the way entertainment content is experienced and delivered,” according to the company.

Xbox Entertainment Studios will also oversee interactive live events, similar to last night’s live streaming of the Grammy Awards’ red carpet broadcast and the Election coverage last year.

“When I worked in traditional TV, we would find ourselves saying things like ‘Wouldn’t it be cool if we could add an interactive aspect directly into the show and engage directly with the viewers?’” Tellem said in this Microsoft write-up. “With Xbox, that is possible today.”

Microsoft is planning to launch more than 40 new voice-controlled, customized TV and entertainment apps for the Xbox this year. Tellum added that users will have to pay for the content, but it could be bundled into a monthly cost like customers already pay for.

Tellem was hired in September and was at CBS since 1997 where she ran its entertainment division from 1998 to 2009.

It will be interesting to see how Xbox competes with companies like Amazon and Netflix, both who are starting to produce their own exclusive content. Amazon recently announced a streaming deals with CBS and PBS, while Netflix just premiered its own, exclusive original series “House of Cards.” Amazon is also producing its own comedy series 

Microsoft also is working on something called IllumiRoom, a research prototype that uses a projector and Kinect for Windows to extend gameplay beyond the television set to the entire room.

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