The Sunday Times reports that Microsoft has been in talks with the BBC along with “several other European media companies” as it gears up for the European launch of its XBox Live Video Marketplace.

Ross Honey, senior director for media at Microsoft’s content and partner strategy group, is quoted describing the BBC as a “great content provider” and says that Microsoft is “working diligently on multiple fronts to make it happen.” The BBC’s growing library of high-definition content, such as the award-winning Planet Earth series, makes it a good fit for the XBox 360’s HD video capabilities.

As paidContent:UK notes, the BBC has already expressed its intent to extend its UK-only iPlayer catch-up service to other platforms, including game consoles and set-top-boxes, which may well include the XBox 360. Although, downloads would need to expire after 30 days in order to comply with the way the BBC licenses content from third-party producers.

The BBC could also offer paid-for downloads or rentals through the Xbox Live Video Marketplace, as it already does on competing download services via its commercial arm, BBC Worldwide. However, whether or not the UK version of XBox Live would be included in such arrangements is unclear. Currently many BBC Worldwide online offerings employ geo-blocking to keep out UK users, so as not to come into conflict with the BBC license fee. As bizzare and confusing as that that sounds, the idea is to keep BBC content commercial-free inside of the UK, since it’s directly funded by the British public.