It’s hard to keep the speculation and rumors in check about the upcoming Xbox 720 with all the interesting elements being added to Microsoft’s current 360 gaming console—but it’s obvious that they’re gunning for the cloud and for streaming video media with every step they take.

So when a patent appeared in USPTO recently that seemed to suggest that Microsoft intended to mix a game console with digital recording capability, it only seems likely that this is intended for the dominance of the Xbox as the dominant living-room set-top-box.

As Kotaku discovered, Patent # 8,083,593 granted by the U.S. Patent & Trademark Office December 27^th to Microsoft describes a device that would serve as both a game console and a digital video recorder (DVR):

A digital video recorder (DVR) application running alongside a television client component allows users to record media content on the gaming console. The DVR application also integrates itself with the console menu. Once integrated, users can record media content while playing games. Alternatively, users can record content when the gaming console is turned off. The recorded content can include television programming, gaming experience (whether local or online), music, DVDs, and so on. When in the recording state, users can also switch between various other media modes, whether gaming, television, and so on.

The most recent update to the system makes the Xbox 360 into a streaming media entertainment center and the implication from Microsoft’s alliances with cable companies seems to suggest that they’re aiming to absorb all entertainment.

Already at the center of most households, gaming consoles hold a position next to the television that has often been dominated by a cable box, DVR, and/or VCR. Of course, the Xbox—and other consoles—play DVDs and some Blu-ray. Adding the capability of putting the cable connection through the already almost all-in-one Internet entertainment device will only lead to giving it the edge that it needs to centralize everything that a family does with their living-room TV.

Of course, that also means there’ll be a lot more fighting over who gets to play a game or watch a cable TV show on the big screen.

Looking at how far the Xbox 360 has gone—and continues to forge new opportunities—suggests a lot of what we might see in Microsoft’s next-generation hardware.

They already have a ready-made market of households that place their product right next to their television. No doubt it’s poised to unseat other set-top-boxes for both cable entertainment and Internet streaming entertainment because it’s already positioned exactly where those devices want to be.