New York Times reports that Microsoft has "held in-depth discussions" with the Walt Disney Company to stream ESPN programming through Xbox Live. According to anonymous sources, ESPN would provide live streams (like it does with the titularly similar – though unrelated – ESPN360) to subscribers for a fee. There is also the possibility that Microsoft may "create some interactive games in association with ESPN" ... as compared to non-interactive games?
The idea described sounds similar to that of the sports-heavy – and UK -only – Sky Player. While North America doesn't currently have a TV streaming application, it does have Netflix. If the Times' sources are on the money, it seems like the ESPN offering would be a similar streaming app, not to mention the next step in an increasingly non-interactive battle for the living room.