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Nancy Tellem has always been a pioneer, first as a woman in the traditional TV entertainment biz and then as #2 to Les Moonves at CBS Inc. When she transitioned to a consulting role in January 2010, Tellem indulged her passion for the digital world full-time. Meetings with Microsoft to discuss CBS/CW evolved until June 2012 when, after three months of negotiations, Microsoft announced her appointment as Entertainment & Digital Media president. Now she’s expanding her turf while Microsoft expands its entertainment footprint. At the ‘D: Dive Into Media’ industry event late Monday, she spilled about her vision for entertainment on Xbox and about her new Los Angeles-based Xbox Entertainment Studios. But Microsoft and innovation do not go hand in hand: it’s been a digital slowpoke from the beginning and now can’t even make a decent computer operating system. Not only is Windows 8 a bomb, but its brand new Surface tablet is a bust. Which leads us to successful Xbox.

Tellem said that, during 2013, Microsoft is planning to launch more than 40 new voice-controlled customized TV and entertainment apps on Xbox. “We want to partner with the Industry to bring entertainment into a new era,” she told the panel. “It’s an era when interactive entertainment becomes the greatest form of all entertainment – and we couldn’t be more excited to play a part in it.”

Tellem pledged that Microsoft will continue to partner with content creators, networks, aggregators and advertisers to “pioneer” the future of TV and entertainment because viewers want to do more with their TV shows, movies, sports and other forms of entertainment. “We believe that we are at the start of the next wave of truly interactive entertainment,” she noted. Tellem also now oversees live event programming for Xbox LIVE. (She oversaw an interactive Red Carpet for this year’s Grammy Awards on CBS and will be doing the same for the 85th Academy Awards on ABC.)

“When I worked in traditional TV, we would find ourselves saying things like ‘Wouldn’t it be cool if we could add an interactive aspect directly into the show and engage directly with the viewers?’” Tellem told the panel. “With Xbox, that is possible today.”

Microsoft had been toying with the idea of a bigger entertainment presence for awhile and began quietly looking among TV industry bigwigs for an entertainment executive since late 2011. But this isn’t a company that embraces change: over the years Microsoft had been slow to enter the entertainment space, while Google, Netflix and Amazon have made huge strides. Hollywood also remembered that Microsoft explored a partnership with Peter Chernin in 2010 to launch a TV channel for Xbox Live users. At that time, Chernin approached Conan O’Brien’s representatives with the idea of the comedian bringing his show to the new channel after the late night host left NBC. It didn’t happen. Then Xbox Live in October 2011 unveiled a slew of content deals with more than 40 U.S. and international providers, including Bravo, Comcast, HBO GO, Verizon FiOS, Syfy and the BBC. Microsoft had said that its ultimate goal is to make its video game console a one-stop shop for entertainment where users can switch easily between video games, DVDs and entertainment content — from games, music and fitness to news, sports, live events, television series and movies. If anyone can do it, Tellem can.