Youtube comes to Xbox

Microsoft has just added another notch to its list of reasons why you never have to leave the Xbox Live interface.

The software giant has just launched a new app for the Xbox 360 Dashboard – which was just updated last week to make “apps” more prominent – that gives users access to the time-killing video sharing site.

For now, the Youtube app is available in beta test form only so there will likely be enhancements and updates rolling out in the near future, but eligible users can find it in the app marketplace.

Since it is presented in app form, not all videos are available, including some trademarked and licensed content from official content partners. On the flip side, the streaming window and display are optimized for the Xbox 360 interface.

Video are presented without comments but features like Watch Later, Favorites, and Playlists are all embedded in the new app, along with the standard like/dislike functionality. The most noteworthy feature, of course, is Kinect compatibility.

Meanwhile, the PS3 has been capable of running Youtube from the beginning thanks to its built-in Web browser. The PS3 browser cannot access sites like Netflix and Hulu, not because of Sony but because of restrictions put in place by the respective site owner, though Sony has been active in updating its app presence on the PS3 as well.

There are Hulu Plus, Netflix, and Vudu apps available on the Sony platform. The PS3 and Xbox 360 have been going head-to-head for not only to win the contest of best game console, but also the larger competition of living room domination. That is likely to be a bigger trend in 2012 than any advancement in actual gameplay.