Well, if they have a 360, then they're going to have to be satisfied.  Even if it was a horrible deal, people would still rationalize it in order to keep from feeling like idiots.  I'm not saying that's the case now, but that would be the end result if that were how the situation played out.  No one is buying a 360 and a copy of Halo 4 going, "the console and games are neat, but paying for LIVE is what I'm REALLY excited for!"  That's not the incentive for the majority of people, I'm almost certain.  My guess is that a significant number of people who have bought an Xbox didn't know they had to pay a subscription, especially if it's the parents putting their credit card on the line.  All of this kind of mitigates some of what you're saying.

Also, P.T. Barnum would lead us to believe that a lot of people doing something doesn't necessarily mean it's a good idea.

From what I've seen in the wild, a lot of 360 owners think of it as a necessary evil.  It's not something they really want to do but it's something they've got to do in order to play with their friends.  Most of the Madden and CoD weekend-gamers I've met aren't exactly happy about it, as some of Microsoft-centric forum-goers would have us believe, but it's also far from being a deal-breaker.  I've talked with more than one person who said some variation of, "it sucks that I have to pay for LIVE but that's where all my friends play".

Personally, the LIVE subscription is probably why I don't have a 360.  I certainly don't hate that the service exists and I have no problem with anyone else paying for it, it's just that I don't think it's worth the cost when I'm happy with the alternatives.

None of those services had all the features of Live until they copied them.  Its not free but that means they've trail blazed on the feature front for the integrated online experience.  I know what I'm paying for, my guess is you don't know what I'm paying for.  If the online experience had been left for Sony or Nintendo to push we would be lucky to have advanced past the original Xbox Live feature set.  Microsoft have heavily invested back into the infrastructure they charge for and that's what those people who've been loyal subscribers for years are happy to pay for it.  I just don't see Live ever being free, the beauty of the PS3/4 is choice though.

You can't have both of that though. Either you are loyal to friends or loyal to your XBOX Live investment. Plus next gen if all your friends switched to the other system you wouldn't be like "sorry guys my gamerscore is too important."

47.2m which is pretty much exactly the same number as the unofficial leaderboard would suggest:

http://www.xboxlivescore.com/xbox-live-leaderboard

47,193,839 Xbox LIVE users

Yeah but this doesn't match the OP which says 18% was 6 million. That would only add up to 33 million plus 6 million.

so 18% 47.2m = 8,96m

For some people it will be friends. For some people it will be personal investment. For some people it will be because they simply prefer Xbox.

Some people will be a mix of all 3.

Some people will migrate to the competition. Some people will stay. Some people will buy into it.

Its hard to really predict how it will happen, but Live as a service is growing daily. The userbase is growing daily. Its a gigantic success despite the flaws and a lot of the criticism it gets is unfair.

Can one person on this site give a reason why ms should not charge for its service? Given the low margins on hardware and software and in many cases sold at a loss, how can any company justify not charging for its service. I want financially sound companies making games that way in the future they can continue to make games.

That doesn't change the fact that they could offer it for free, but don't. What have they invested in really? The Dash? Metro? More space for ads (jk) But seriously, MS must be making a fortune off Live and what do they do with it.. add more and more services that I don't want or need that has to be accessed through Gold (great). A lot of apps on PC had those features long before Xbox Live - Ventrilo, Teamspeak, Xfire, Steam etc. Hell, even Skype.. which (ironically) is now owned by MS is free.

Its the basic principle, they get you to invest time and money into their service and tie you to it. Your friends will do the same and will have to deal with paying a small sum of money to talk/play with each other. To access your apps - Twitter, Facebook, YouTube, Love Film, Netflix you'll have to pay to access them.

And now some of their competitors ofer similar services (for free), I just don't see Live as anything more than a cash grab. But hey, if you're happy with it I'm cool with that.. this is just me just giving my 2 pence. :)

It gets criticism because it puts basic features found free ever where else behind a pay wall. While, in reality they don’t offer anything better than the other guys. People only pay for the service because they are forced to, so they can play the other half of their games they already paid for. The criticism is just and will continue until something changes.  Also i think your easily over estimating Xbox loyalty, they could easily loose major ground this gen, and with all this focus on TV. They are likely to do so.