Xbox Live set to display adverts for streamed videoMad, but true: Microsoft is about to start running advertisements on Xbox Live.

Included under the auspices of providing “break time” for users, the ads are set to appear between video and TV apps on the service, with providers such as ESPN, Last.fm, GameSpot and MUZU.TV adding their commercials to existing in-app promos from names such as UFC, TMZ, and Crackle.

Microsoft’s Ross Honey said:

“With the growth of Xbox Live, advertisers no longer have to choose between digital and TV advertising – we’re offering the impact of TV and the interactivity and addressability of digital in one platform.

“As more and more industry leaders like ESPN work with us to help monetise their content on Xbox Live, TV media buyers win with the ability to extend their standard TV spots to this highly engaged consumer audience.”

However, he and M$ (once again the acronym is apt) are completely missing the point. Users pay enough for the service as it is without being bombarded with adverts, while PlayStation 3 users enjoy a service that remains commercial-free zone (and yes, sometimes it is an uptime free zone, but let’s stick to the point).

This is a massive #fail for Microsoft, and they need to go into a quick reverse on this decision if Xbox Live is to retain any credibility as an entertainment system. After all, people opt to stream video to avoid inconveniences like advertising.

What next, news bulletins in the middle of Halo 4?