Microsoft Xbox LIVE Diamond subscription IPTV tipped for E3 2011

Details of Microsoft's E3 2011 launch have leaked, and as expected it's a new IPTV service baked into Xbox LIVE. The company is putting the finishing touches to Xbox LIVE Diamond, WinRumors' source claims, the official name for the much-rumored Project Orapa. The Diamond TV system will combine existing mediaroom IPTV services and Xbox LIVE, harnessing Kinect-based motion control along with various music and video offerings.

Microsoft's demonstration is expected to consist of the Kinect avatar control, as well as the IPTV streaming, assuming it can sign off on the rights before the keynote. "Microsoft is currently in last minute negotiations to secure the necessary agreements in time" the source claims, pointing to Apple's similar talks over iCloud.

Xbox LIVE Diamond is rumored to be the first stage in a standalone hardware IPTV push by Microsoft, powered by special SoC's based on Silverlight. Ex-Microsoft Hardware head Tom Gibbons shifted over to the TV and Services business, in a move that's said to be at least partly connected to the "Xbox LIVE, Kinect & Mediaroom mash-up."

Microsoft's other announcements at E3 are believed to be around a new "Fusion" line of branded products or services, with trademarks for "Fusion Vault", "Fusion Genesis" and "Fusion Sentient" all having been spotted. The domain has also been acquired. Finally, there's Microsoft Ventura, a set of streaming music and video services that uses social networking and recommendations to promote new content.

SlashGear will be at E3 2011 next week, bringing you back all the details of what Microsoft – and others – announce!