The Joker said it best : "If you're good at something, never do it for free".

.................he then went on to blow up a hospital.

If the competition are doing something similar for not cost what so ever, then there is indeed a problem.

There are quite a few more things that they store as well, such as voice, video, and text messages, but I didn't feel the need to extrapolate.  The more data that a company stores, the more it costs.  I work for a company that stores a minimal amount of important data about our customers in 2 data centers.  The amount of money spent on the data centers(electricity, monitoring, maintenance, etc.) seems exorbitant when shown the amount of data being housed.  Then again we do have an international organization that provides content for 127 countries in 25 languages.  Since we wanted a fail safe and reliable service, all data is duplicated between the two centers, so that if one goes down, all traffic is routed to the other(this also helps with deploying our Enterprise Releases).  If we were a really big site, that had much more traffic, we would need even more.  We also pay for CDNs for faster retrieval of static content, I am sure they cache often.  We also house a ton of servers in the data centers.  Each "web application" that we develop runs in several instances on several servers so as to allow for appropriate load balancing.  The more servers that we accrue, the more people we have to pay for monitoring.  I am sure all of these things apply to Live, PSN, Steam, etc, and on a MUCH larger scale.

Those are two different things. Online playing is a basic functionality, Qore is a video download service what does it have to do with anything? MAG is a pay-to-play game, like so many out there and shouldn't be considered a basic functionality either.

What about when he burned most (if not all) the money he had just made before blowing up that hospital?

Yes, it is. For us Europeans, it's €60, which is 80 dollars. That's a lot of money to spend for something which should be free.

Using your latte analogy:

Imagine Starbucks started charging $50/year membership fee to buy coffee.   A lot of people will just say, "It is only 14 cents a day, why would people even care about 14 cents a day, this latte is excellent!"  The problem is that every other coffee shop does not charge a membership fee to get coffee there.  If I wanted a coffee at Starbucks twice a month, it would average out to be an extra $2 per visit.

For the value that the hardcore get out of Live, they do not care about the fee.  For the casual online player, it is a big deal.  They buy 3-4 games a year and are paying an extra $12-$16 per game for online play.

I totally agree,  just like the giving up a latte once a month is a bad example as well.

The point is that for the harcore player $50 is not a big deal.  For the occasional/casual player, it is a big deal. Because you think the Live fee is a good value for you, it is not a good value for everyone.

Look at games for Windows Live. How long did that last as a paid subscription on PC? like a year?

People don't buy Microsoft's BS. That is a free service online now. Why? Cause no one is going to pay to play online when they can do it so many ways on PC. People need to understand that all XBL is is a Revenue stream. they don't need your money for P2P matches, or anything like that. Especially with no dedicated servers. They're just taking your money.

If everyone just had Silver accounts, or the paid subscription rate fell a lot, they would lower the price or make it free.

It's just free money that stupid people are willing to pay to do something they should get for free. Especially when no one else charges for online.

@ JaggedSac