Is casual gaming the future of Xbox?

Microsoft is said to be making an Xbox-branded set-top box along with an Xbox tablet, so where does that leave the actual Xbox?

Yesterday, The Verge broke the big news that Microsoft is working on an Xbox set-top box. The device is apparently set to be a low-cost alternative to the full Xbox, focusing on casual gaming and entertainment. According to the report, the set-top Xbox will run on a modified Windows 8, be an "always-on" device and support casual titles rather than full Xbox games.

Our sister site GameSpot reached out to Microsoft and scored the same boilerplate marketing comment that everyone else got:

Xbox 360 has found new ways to extend the console lifecycle by introducing controller-free experiences with Kinect and re-inventing the console with a new dashboard and new entertainment content partnerships," reads a line from the statement. "We are always thinking about what is next for our platform and how to continue to defy the life cycle convention.

This comes just a week after the news of an Xbox-branded tablet broke, and, earlier than that, we had rumours of a proprietary Xbox smartphone (as opposed to a Windows phone with Xbox apps). The Verge even reported that Microsoft is talking to TV OEMs to license out Xbox functionality directly — a TV with Xbox "core services" built in.

So, is Microsoft spreading the Xbox too thin? Considering we still haven't had any confirmation on the Xbox 720 (beyond the code name Durango), does Xbox's drive into mainstream casual entertainment run the risk of leaving its core gamers in the rear-view mirror?

Or does an Xbox set-top fill the needs of people who have come to see the console as a video- and music-delivery device that also happens to play games? Let us know your thoughts in the comments.