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I really don't distinguish all of those. In the end, revenue is revenue. Yes, all of those services make money and revenue. My point is that they aren't making ENOUGH, to offset their costs. And my point is that we don't really know how much Xbox Live costs Microsoft.

Also, there's nothing wrong with making profit. Even if Xbox Live is profitable, MS should make a trade off choice between ads and the user experience. If it's too intrusive, then they will lose customers and revenue. They need to find the right balance.

 

Yeah Microsoft makes quite a bit of money from Xbox live, 65% profit after production costs. 

Source

Microsoft is a company and they should seek to optimize profits and the ads that are announced would only go with with TV and video apps not intruding on gaming. Also the ads are only 15-30 seconds long for the media aps, seems inqonsiquential IMO. All in all the ads seem to be at a good balance and MS will be making even more profit.