Microsoft Corp. (Nasdaq: MSFT) has moved its Mediaroom division into a new group that's essentially managed by the Xbox people, an industry source tells Light Reading.

The source adds that some of the Mediaroom people have moved on to other jobs within the Xbox team.

Such a move would seem consistent with the Xbox's ascent as a TV platform. Reuters recently reported that Microsoft is looking into ways of using the Xbox console to deliver pay-TV services.

More generally, there's been a suspicion that Mediaroom is losing rank at Microsoft. According to another source, who spoke with Light Reading at last month's TelcoTV conference, IPTV is a profitable business at Microsoft -- just not profitable enough.

Here's more about Mediaroom, including Microsoft's efforts to break into Tier 2 and 3 markets.

• Motorola Plays Host to Microsoft IPTV
• Cisco Spiking Its IPTV Middleware
• AlcaLu Courting Smaller Telcos With IPTV Play
• RGB Gets Mediaroom Stamp
• ETI Touts Quick Mediaroom Integration
• Mariner Monitors Microsoft Mediaroom

— Craig Matsumoto, West Coast Editor, Light Reading