Microsoft’s Xbox 360 Elite launch in Europe last month is to be followed by the launch of the Xbox Live service soon, and officials from Redmond are apparently targeting BBC content for that launch.

With the Xbox 360 envisioned as a the next big media hub in your living room (Microsoft plans to launch early next-year an IPTV service that will take full advantage of the console’s processing power for HD signals), it’s natural to think that for a giant like Microsoft, which is already crafting a P2P platform for delivering live TV shows (www.livestation.com), a partnership with major content owners in Europe is the best way to expand to the Old Continent the successful XBL video downloading service.

Last November the Redmond behemoth had dived into the profitable video-on-demand business with movies and TV shows from CBS, Paramount, Disney, Fox, MTV and Warner. Registered Xbox Live users pay 320 MS points for a movie (if they want to see it in HD they must pay 480 MS points) while for a single TV show they ease their pockets of 160 MS points. For better viewing of high-def movies, Microsoft has recently added an HDMI port to its gaming rig.

However, just like Apple stumbled upon the twisted and tortuous pricing bureaucracy that plagues Europe when iTunes was launched in major markets like Germany, France or Spain, so did Microsoft with the licensing agreements for content it bought in the US. This is why the launch of the XBL service has been delayed so much. And also because Microsoft was in need for localized content.

According to Times Online, Microsoft’s first big partner in Europe for video-on-demand is BBC, but there are other possible partners involved too. Ross Honey, senior director for media at Microsoft’s content and partner strategy group, confirmed the company had spoken to the BBC and several other European media companies.

According to Honey, BBC was attractive for its large library and interesting high-definition programmes, like the award-winning Planet Earth.

“We are working diligently on multiple fronts to make it happen,” he said. “The BBC is a great content provider.”

During last month’s Games Convention, Microsoft’s rival in the gaming market Sony had also announced a plethora of new features for its PlayStation 3, which should really give us a good picture of why the PS3 has been called a “computer entertainment system”.