XBox has been rumored to become profitable since 2004, but the financial reports have been telling a different story quarter after quarter. It's still on a roll dumping $1 billion every year or $6 billion total so far. I don't think that will change soon if competitive price cuts actually take place. If MS stay at $399 for a little longer they might actually have some non-red quarters in 2008. XBox Live (Gold) doesn't strike me as a particular money maker. It's like selling one extra game per year, and people who subscribe Live might actually buy one game less because they're out of their budget. Also running those game servers must be very costly. Not even the iTunes store is profitable, and it has 10 times bigger revenues than Live ($1.5B vs $100M-$200M).
Hardcore gaming is a bubble economy blown up by Microsoft's $7 $6 billion losses.
