The news comes in the shadow of an effective relaunch of Microsoft's Xbox Video services, which will aims to create a seamless video purchase and playback experience across multiple devices (Windows 8, Xbox One, and Windows Phone 8 devices). This is referenced in Microsoft's email, which notes that purchased content will continue to be available through XboxVideo.com.
Here's the full text of the email from Microsoft, which can also be viewed here:
This email is to notify you that in late February, 2014, Xbox will be making an update to our video catalog. This update will allow us to more quickly and efficiently add the highest quality video content to the Xbox Video service.
As a result, beginning in late February 2014, any Xbox Video content you own as of then, will no longer be playable through the Zune PC client, Zune devices, or Windows Phone 7 devices. We apologize for any inconvenience this may cause.
You can still enjoy all of your owned content at XboxVideo.com on your PC or Mac*, or on your Xbox One, Xbox 360, Windows 8 & 8.1 PC and tablet, or Windows Phone 8.
Microsoft's ongoing changes to the Xbox Video service (i.e. an effective relaunch) includes preparation to shut down the backend (media rights authentication servers) for the older implementation of the service. One of the consequences of this can be seen in this notification of playback support being discontinued for Windows Phone 7 devices.
Th "new" Xbox Video service, which in part ties in with the launch of the new Xbox One device, is also set to fill a glaring gap in Windows Phone 8's ecosystem service line up. Currently, Microsoft does not provide a way to purchase video to be consumed on Windows Phone 8 devices. This is in sharp contrast to both iOS and Android platforms, where video content is available through the Apple App Store and Google Play Store respectively.
Microsoft has yet to offer much in the way of detail on how the Windows Phone portion of the new service wil work, but a recent blog post on the official Windows Phone Blog did note that an Xbox Video app was "coming soon" to Windows Phone 8:
Easy access to a massive library of the latest blockbuster movies and TV shows. The Xbox Video app for Windows Phone lets you buy or rent your favorite movies and shows, and watch them across any supported device. Only Windows Phone customers will be enjoying Xbox Video on their phones this holiday season.
This would suggest Microsoft will be following an app delivery route for Xbox Video, rather than integrating video content into the existing Windows Phone Store.