Today's Xbox 720, or next-gen Xbox, rumor comes via Kotaku, who spotted an interesting patent granted to Microsoft for a device that would function as both a game console and digital video recorder.
The patent, which was originally filed in January of 2007, was approved by the US Patent & Trademark Office on December 27, 2011. Patent #8,083,593, which states "Recording media on gaming consoles" and is listed as "Abstract" describes the device for the next-gen Xbox as:
An integrated gaming and media experience is disclosed, including recording of content on a gaming console. 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.
Judging from the description, it looks like Microsoft is aiming for the Xbox 720 to allow users to record media footage or television content – which further emphasizes Microsoft's move to make the Xbox console more of an entertainment hub.
Looking at the latest Xbox 360 update, you can begin to see the Xbox's transition into more of an all-around entertainment hub. Currently, Microsoft has been busy adding dozens of apps to the Xbox 360, including YouTube, Bing, and Facebook. Microsoft has also been rumored to develop original shows for Xbox LIVE, and is said to be looking to hire a television executive.