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You're right that free games aren't the draw for PS+. The only way to make people pay for it is to require it for online play. Since online is free for PS3, nobody really cared even if the free games were available.

However, the only reason people are now saying that PS+ is better than XBL is because if we have to pay in order to play online, then that isn't a bullet point for why one service is better than the other. You have to look elsewhere: the games. And PS+ compensates you way better than XBL.