Xbox Live usage is up by 30% on the same period last year, with users spending an average of 84 hours a month online.
However, users spend more than half of their time online watching movies, TV shows and listening to music, Microsoft's Yusuf Mehdi told the Los Angeles Times.
"What we're seeing is that people are turning on the Xbox to play games and then keeping it on afterwards to get other types of entertainment," Mehdi explained.
The news comes on the same day that HBO GO and Xfinity launched for US Xbox 360 users.
Earlier this year, Microsoft announced that Xbox Live has seen a three-fold increase in video consumption since November's dashboard update.
The firm also revealed the most popular apps on Xbox Live, with 4oD being "incredibly successful" and Zune remaining "very popular". Netflix and LoveFilm were also favourites.
Watch a video for the Xbox 360 dashboard's new entertainment services below: