NJ5 said:
Why would 30% of players be looking for matches at the same time? Do you spend 30% of your online time looking for matches? As for how many dedicated servers they would need: Let's say 5 million users are playing online at any given moment... and let's say each dedicated server can handle just 100 players (it can probably handle much more than that, especially if using multicore CPUs for the servers). That means they need 50,000 servers running. With 20 million users paying $50 dollars a year (or $1 billion in revenue), if they spent all the money on servers that would cost $20,000 per server per year. That's an insane price, when many companies offer RETAIL prices of $59 per month per server (and that's not the cheapest by any means).
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Well, you cannot plan your infrastructure on maybies and probablies. If there is a chance something might happen, plan your infrastructure to handle it. 30% is probably a low number for what could feasibly occur on the service. And server costs usually range around $250-$1250 a month to run depending on the level of quality the server will run at constantly and the more servers you have, the less cost per server for maintenance and such. So you are looking at a low end of $3,000-$15,000 per server per year. 50,000 is probably very high. I have absolutely no idea how many servers they have though.
I am not trying to say that the maintenance costs make up the Live sub cost. I am merely saying they are not trivial. Sure they are making a profit on subscriptions, but they would otherwise be eating millions of dollars in maintenance and development costs. Some business models take the hit, others don't.
EDIT: Also, that 20 million might be a little high. Also, MS does not bring in $50 per sub. Probably around $30-$35 is what they charge retailers, possibly less.