Microsoft will make BILLIONS from Xbox Live.

[Squilliam]

Loud_Hot_White_Box said:

Squilliam said:

You heard me right - Billions.

If you estimate that they make $20 from every Xbox Live gold account per year in profit and they have a 1/3rd attach rate for instance. It means that currently they would be making $120,000,000 in profit from the current userbase per year. Multiply that number by say 3 - that means about $400,000,000 in profit from the current userbase over the next three years.

But Xbox live gold isn't stagnant, its growing with all the multiplayer/online games coming out and the organic increase in userbase. If they add another 4 million accounts to the service by the end of the year thats another $80,000,000 added to their bottom line, bringing the total profit from just that area of the service to over $200,000,000 per annum.

Since the userbase is expected to increase to 40,000,000 consoles - and assuming that same 1/3rd attach rate with a $20 profit windfall on every one thats $260,000,000 per year using conservative numbers for final sales of the 360 and the attach rate for the gold service.

But this isn't the only windfall that they are making on live. The have Online movies/music downloads and the kickbacks ascociated. There is also downloadable content/Xboxlive arcade downloads to factor as well. Since there are three MMO games coming for the 360 this year/next year it makes sense to assume they will also be getting a kickback from the subscription service and the fact that every user must also have a Live gold account.

But heres the kicker... The money they can potentially make increases as the cost of production for the console goes down and the retail sales price follows. The windfall they make on a $200 console connected to live is much greater relative to its sales price than when they were originally sold for $400. With greater sales comes greater profit. Their incentive is to get the machine into as many hands as possible, so they should offer pretty good value on the machine itself to encourage more sales.

Don't fret, if you own an Xbox360 and you use it online this extra money will be used to buy awesome multiplayer exclusives for you to play and the increased vitality it offers to the Xbox360 will be carried forward to the nextbox. For anyone who likes the system and the what it offers can say that it offers value for money in the returns it gives gamers.

Agreed that MS offers fewer features for the price of their console: PS3 gets you online gameplay, HD movies, wifi, etc without paying more for it. They also make more money from every console sale. Elite Xbox360s must make them quite a bit of money.

MS's online propaganda campaign somehow worked to convince its fans that "PS3 is overpriced" at the same time that "MS fans pay more."

Profit-wise, MS's strategy is better.  Sony includes so much with online gameplay, continuing firmware badassness, upcoming Home, that they really should be seen as the fan-favorite good guys (yes, in game XMB is taking too long), but somehow in these conversations MS fans conveniently care about their company's bottom line rather than what they are forking out to the company in payment for the benefits received.

Oh well, competition is good for us fans.

You could use the same argument for DVD vs Blu ray as for Live vs PS3 online. They both offer the same services yet one is considered better than the other generally and that product is charged at a higher rate.

Sony is no better than Microsoft for what it does in the console sphere. Theres no angel here.