It’s been long rumored, but now it’s close to being confirmed: Skype integration will be coming to Xbox 360. Tom Warren at Winrumors discovered a video on YouTUBE (although quickly pulled by Microsoft) that demonstrates a new Xbox 360 Dashboard and a panoply of interesting new features.

Unfortunately, the video now displays the message, “This video is no longer available due to a copyright claim by Microsoft Corporation.” A fact that has been taken as proof of its authenticity by the Winrumors article and it seems likely that it may have included leaked information that Microsoft didn’t want the public knowing about for the immediate future. The video, combined with the fact that Microsoft has referenced Skype integration with Xbox in a recent survey, have lead to this expectation.

It looks like Skype will be integrated directly into the dashboard and will be the platform for calls within Xbox LIVE and Xbox parties. Details are extremely sketchy; but it looks as if Skype will integrate a video-calling feature as well. This would interface extremely well with the Xbox Video Kinect system and essentially turn the Xbox 360 (and future 720) into a living room teleconference system that could draw in the gaming generation and their parents alike.

In fact, Xbox LIVE and Skype could be the last-mile solution for connecting the living room with the rest of the world: for example, Xbox 360 in the living room allowing people to stay connected with their friends on mobile devices using Skype would provide an affordable real-world video teleconference into the field.

No doubt that would be a good way to make that train commute less boring.

And, we could imagine, that Avatar Kinect—and its interesting expression-detection technology—could be put to good use within Skype video teleconference for people who want to maintain their privacy, anonymity, or were simply having a bad hair day to still connect with their friends.

Microsoft did pay $8.5 billion for Skype during their acquisition, a price roundly and repeatedly confirmed and called agreeable. Bill Gates himself advocated the multi-billion dollar deal to purchase the Internet VoIP and video teleconferencing company when Microsoft stretched out their hand and scooped it up. Integrating it into the Xbox 360 Dashboard would pave the way for further developments and innovations that could put the deal on the map more so than its hefty price.