As the Microsoft Corp. (NASDAQ:MSFT) puts more work into television integration for the coming Xbox 720 console, many wonder how the always-on connectivity rumors that have fueled criticism for weeks will fit into the equation.

Xbox 720: The Return Of Microsoft Media Center?

Most are unhappy with the idea that Microsoft's next-generation gaming console may always require an Internet connection to play games. However, the Redmond, Wash.-based software company has remained largely silent about its plans. That has not stopped others from talking, as several tipsters have told the Verge that the new console may function as an overall media center, including TV integration.

Sources told the tech website that the device will function by overriding cable-box signals through a high-definition multimedia interface, or HDMI, connection to display the Xbox interface on top of an existing TV channel or set-top box, similar to the way Google TV works. In addition, there will reportedly be an upgrade in Microsoft’s Kinect sensor that will be enable it to detect multiple users and detect eye movement, which will allow users to pause content when they are not facing their TV screens.

This news is unsurprising as just days ago Microsoft announced it had sold its IPTV business Mediaroom to telecommunications-equipment giant Ericsson (NASDAQ:ERIC). “Microsoft is dedicating all TV resources to Xbox,” the company said about the deal in a statement. This has been its only comment on coming Xbox developments.

'Always On' Compatibility: What The Experts Are Saying

Many in the know have come forward lately, which has the public certain that always-on connectivity will be featured on the Xbox 720. Recently speaking to the tech website Eurogames, Ubisoft Montreal CEO Yannis Mallat described the console as “connected, social, immersive and interactive.”

On April 4, the tech website Kotaku published a report in which a developer source detailed how always-on connectivity would work on the Xbox 720.

“If there isn't a connection, no games or apps can be started. If the connection is interrupted, then after a period of time -- currently three minutes, if I remember correctly -- the game/app is suspended and the network troubleshooter started,” the source said.

The report led to Microsoft Studios creative director Adam Orth’s taking to Twitter April 5 to express his distaste for the heavy opposition to always-on connectivity. His outburst, in which he told enthusiasts to “#dealwithit,” subsequently led him to resign his position at Microsoft, as Game Informer reported Wednesday.

While Microsoft has publicly apologized for Orth’s comments, the company has neither confirmed nor denied the existence of the Xbox 720’s always-on connectivity. Given the news about TV’s integration into the next-gen Xbox, some enthusiasts now consider that such a mechanism on the console does not necessarily indicate that an Internet connection is required for all gaming.

Solution To Backward-Compatibility Problem In 'Xbox Mini'?

Tech website VG Leaks reported that it has information from Microsoft about the company’s plans to release a new Xbox as well as a redesign of the Xbox 360 intended to function independently as a set-top box and compete with Apple TV. Details indicate that this is the device that will provide an always-on gaming experience, in which users will purchase Games On Demand via Xbox Live or download games if previously purchased, as the device will likely not have a disc drive. The device is apparently intended to work alongside the Xbox 720 and resolves the backward-compatibility issue, which is the real criticism fans have had about the idea of always-on connectivity. 

According to VG Leak's information, the Xbox 720 won't support backward compatibility for older games on its own. The second device, which developers are reportedly referring to by the codename “Stingray,” aka the Xbox Mini, can work on its own, but can also be connected to the Xbox 720 to play secondhand games. The Xbox 720 will have a disc drive for offline game play for 720 games, as well as an always-on requirement for its 720 Games On Demand games and for Xbox Mini functions, which includes secondhand game play of 360 games.

Simply put, only Xbox 720 games will be compatible with the Xbox 720, both disc and on demand. Once an Xbox 360 disc is put in a Xbox 720, the user must connect the Xbox Mini device to play the game. Xbox 360 Games On Demand games will also be playable on the 720 through the Xbox Mini. 

The Xbox Mini will reportedly sell separately at $149 or less. Some sources have proposed $99. The Xbox 720's projected price is about $500 for an all-inclusive model and about $300 for a scaled-down model, Microsoft analyst Paul Thurrott said on the Web show What The Tech. He also reported that we should expect to see the latest Xbox at an event being planned for May 21. However, none of this is confirmed.

Despite having no official word from Microsoft, these developments make a lot more sense than previous rumors, and it is easy to understand the confusion. Enthusiasts should now be able to take a breath of relief and hold tight until the big Xbox unveiling, which is likely right around the corner.