I think that without the Live fee there would be a higher attach ratio for 360 games due to people saving $60 (full priced video game) per year, plus everyone would have Live therefore upping the sales of multiplayer/co-op eccentric games.

There is so much fail in this post.  I am a extremely happy gold subscriber, and I have never in my lifetime played a multiplayer game on live.

Most of the games you mentionned are from third parties... Microsft get 100% off xbox live subcription fee yet third parties are the one offering the servers . all Sony's first partie title offer dedicated servers for free Microsoft doesn't this is why you don't see many games on the xbox offering multiplayer games with more then 16 players. can you provide the facts that state live is not p2p please?

Are you sure it didn't? I could of swore that it had free and gold like now. I wasn't 100% sure though and could not find any info on it. I'll take your word though as i do not remember.

@ramses01

Congratulations you pay good money for a service you don't even use. Seeing as your so proud of your shrewd use of money. Would you be interested in buying some ocean side real estate conveniently located on the moon. Think about it. You could have some land you can't use to go with the service you don't use. How about we start our little negotiation at say a hundred thousand dollars. At that price it is a real steal.

@topic

Content you pay extra for is by default not part of the package you are paying for. In other words having more movies for you to buy is not a justification. Especially considering that you don't have to pay a premium to buy said movies. If your going to make a argument. Make a valid one. I see Xbox Live, and raise you Amazon which provides the exact same service

Also I shouldn't have to say this, but it is obvious now that it needs to be said. Microsoft should be servicing you. It shouldn't be the other way around. You shouldn't be paying to make for a better service. Microsoft should offer up a better service so you will pay. You are a customer you should be treasured, and not exploited.

I am still waiting for a actual counter argument, and all I have read in vague comments. What is Microsoft selling you beyond access to online games. Everything they are selling is something that is already free, or you already have to pay for. Unless you have a argument for this you don't have any argument at all.

Just asking for some honesty, and not propaganda.

It was free, and built into every console.

The difference was mics weren't included with the console, and the marketplace was a lot less developed then it is now. There were also no arcade games, and very few games had DLC, one of them was Halo 2.

There is a psychological hook attached to the price of Xbox Live. It is seen as synonymous with quality. If they dropped that there would be a significant drop in belief that Live was ever worth the money. Microsoft wouldnt fund it as heavily as they do as well, which would dramatically change the face of updates. Xbox Live quality updates are as frequent as Sony getting quality games. It's pretty high.

I personally do not use live for anything but playing games. Having said that what i loved about it from the begining is the ease of its use and its matchmaking system. I do not like to play pc games online as much because you have to deal with finding matches or joining servers. I do not of many(if any) pc games that have matchmaking, all seem to rely on a server system. Oth than that I like how easy it is to join games with firends even if we aren't playing the same game. I haven't really used ps3 online and I do not like the wii online. Other services may have caught in the areas i mentioned, but now that i have been with live so long its just familiar and really easy to use.

I kinda agree with this. I think one of the reasons sony has been able to close the gap with the xbox is because their psn service is free even if slightly behind xbox live in content.

 I dont agree that if xbox DIDNT charge, then the xbox live service would be somewhat inferior to now. The online play was one reason xbox was so successful and i think MS would have put just as much resources into it as they are doing now to differentiate themselves from sony and attract gamers.  

Finally, while a lot of gamers on this site (and around the world) are willing to pay to play online, im sure a lot of casual gamers will not. I would be interested to know the number of xbox gold account holders if this info is available to see the proportion of xbox users who pay for online play.

I think it all depends on how one defines "successful".
If it is meant in the sense of "would Microsoft make more or less money with the Xbox brand if people could play online for free?" then I'd say no, they are making more money by charging for it.

IF the 360 had free online gaming, hardly anyone would be willing to pay money for the remaining stuff (despite what many 360 fans claim), so Microsoft would earn less money. And while more people would then be interested in buying a 360, Microsoft would have to raise the console price so in the end probably even more people would lose interest in the 360.

Let's face it, Microsoft wants the Xbox brand to be the Lexmark of gaming consoles, and that strategy is quite successful indeed: Sell a very cheap "starter pack" that attracts lots of people who only look on the price tag and don't really consider follow-up costs, then charge ridiculous amounts of money for just everything.