Two Xbox 720 models in the works - rumour

Microsoft to push budget and premium options once more, according to reports

Xbox 720 will come in two flavours - a cheaper, minimum-feature SKU in line with the Xbox 360 Core SKU, and a premium SKU with all the bells and whistles.

That's according to a Digital Foundry report on (via CVG), which claims Microsoft will take the multiple-SKU strategy much further with its next generation Xbox.

On the one hand, we'll get a "pared down system to be released as cheaply as possible, positioned more along the lines of a set-top box (the use of 360 as a Netflix viewing platform in the US is colossal) and perhaps as a Kinect-themed gaming portal".

Word to the wise, Microsoft: if it looks like this, we won't buy it.

On the other, "a more fully-featured machine with optical drive, hard disk and backward compatibility aimed at the hardcore would be released at a higher price-point".

Kinect is due to receive a significant upgrade, and will probably be bundled with the console.

Depending on who you believe, the next generation Xbox is: a "true hybrid console" rather than a download-only machine; out by Christmas 2012; already in action at EA testing labs; and out in 2014.

Read our next-gen Xbox feature series for more insight from Bethesda, Epic, Starbreeze, EA and DICE.