In the world of interactive entertainment, Microsoft has been at the head of the class with its Xbox 360 Kinect. Kinect is an extension to the Xbox 360 gaming console that allows users to use physical movements to interact with the game itself.

Well, Microsoft hopes to up the ante and unveil its interactive TV programming by the end of the year.

Microsoft hasn’t officially revealed what types of interactive shows they are working on, but some examples could include live events, reality shows, scripted programming and children’s programming, allowing kids to interact with their favorite characters on the screen.

“We are certainly looking at a very robust content production schedule,” said Nancy Tellem, entertainment and digital media president.

 The company wants to keep the interaction in line with what they’ve been doing in the past instead of venturing too far outside of the box.

“It has to be organic and a natural extension of what we are doing,” added Tellem.

In order to keep the content more organic and true to what it has done in the past, Microsoft has set up shop in Santa Monica, California where they have brought in around 150 employees to begin developing its content.

The average Xbox user spends 87 hours a month, and Microsoft recognizes the transition of its console going from a Gaming Console over to an Entertainment Console. With over 76 million Xbox subscribers worldwide, Xbox users consumed over 18 billion hours of entertainment in 2012 alone.

Due to the inevitable switch over to an Entertainment Console, Xbox will continue to stick to its “big and premium” roots and add major upgrades to future consoles. Yusuf Mehdi, senior vice president of Microsoft's Interactive Entertainment Business recently said he will ensure that the future of Xbox “enables voice control, interactivity, and "other stuff that's big and beautiful."