so... i guess from your reply, you don't really have an idea on how the ad revenue compares to the cost to run the service?

btw what aspects of the service do you think drive the cost up so high?

edit : another user attributed the exorbitant costs of xbl to exclusive content, bandwith costs and running servers among other things... what about you?

" Ads probably couldn't support that a lone let a lone everything else Xbox Live offers"

again... thats your conjecture... how much do they pull in in ad renvenue? ( i can assure you its millions )... the main question here is if the ad revenue and cost to run the service cancel each other out and at present we just don't know

"The only thing people try to compare it to is PSN. Which is basically a store with few features and charges publishers for bandwidth."

i see people throwing this around a lot, refusing to ackowledge exclusive services such as playstation home, free realms and dc universe online, from my perspective i'd say thats not a fair thing to say but whatever

"People just see Xbox Live as simple peer to peer"

its odd that you mention that because one of the things i've seen people discussing is that apparently some of the main xbox exclusives like gears ( apparently this caused problems in gears 2 and caused the push for dedicated servers for gears 3 ) and halo run on p2p servers while most of the main ps3 exclusives run on dedicated servers

i'd have thought that it should be the other way around

Show me where I said the ads could cover it or even anything about it.  I saw someone post that something empatically - as in factually in context - and asked for what was behind their claim.  Turned out to be guesses.  Also, the site functions on extrapolation from real numbers polled from retailers so far as I know, not pure estimates based on guesswork.

Your post is simply the kind of thing I was looking for - either example data to support the estimate or some idea why you would think so.  Check the post trail again.  The people I queried simply said "it's this" and then had no real reason to have said so nor any kind of annecdotal evidence or experience.

To make any kind of informed guess here - which is what you're talking about - you would need two pieces of information.  An estimate of Live costs - doesn't have to be the real figures but just something sensible based on some extrapolation of the service infrastructure.  Second, an estimate, based on the kind of knowlege you mention, of probable income of advertising on Live.

I've seen no-one - until you at least mentioned advertising - come up with anything satisfcatory here.

finally, the burden of proof in this site is on the person making the claim.  If you post here claiming X then you better be ready with something behind the claim.  Doesn't have to be facts, but it does at least have to be "I believe based on X that Live probable costs Y and that advertising is probably only W based on Z".  Anything else is simply an internet fact - i.e. a guess.

When I make claims, which I sometimes do, I'm always prepared to back them up with some knowledge if its an informed guess or links if I think it's more than an informed guess.

I've been following the thread and no-one's really posted any numbers so I thought I'd give it a try and extrapolate backwards from what we know about Live revenue.

The one thing that everyone in the thread seems to be forgetting is that all these digital services are also retailers for digital content. Ad revenue and subscriptions probably do make a significant chunk of money but I'd wager it's the sales of map packs, add-ons, games and videos that bring in the most revenue.

Last year bloomberg estimated that X-box Live brings in $1 billion and that MS see 65% profit (meaning $650K profit, $350K production costs). This article seems to suggest that digital sales revenue has topped subscription revenue.

http://uk.xbox360.gamespy.com/articles/110/1104553p1.html

According to Wikipedia, there are 35 millions Live accounts. If we make some relatively conservative assumptions:

1. 15 million are Gold members

2. MS see $20 per Gold member

then we get a figure of $300 million which is still pretty significant. If the Bloomberg estimates on revenue and profit are correct then the subscription alone almost covers the cost of production.

This is still guesswork though, but I think MS could probably break even if they concentrated solely on advertising and digital sales to fund X-box Live although this would only be feasible within the last year or so (dependent on an increase in people purchasing digital media). I can't find any info on how much ad revenue would bring in unfortunately but from the figures above and assuming digital sales brings in only slightly more than subscription revenue, then it's probably en even split between all 3 revenue streams.

Great post, I wouldn't have done it even if I could.

@Resonable
Ads don't bring that much revenue on websites and they have to change them often sometimes they stay no more than 1-2 days before they expire. People get used to them really quickly so it would be irrelevant to pay a ridiculous amount of money to post ads on websites. Many websites like this one have ads everywhere on every space possible and still these websites have paid subscriptions. People need to get paid and investors need to get a good return of investment so ads alone don't always do it for websites.

For a service like Xbox Live, you have to realise that there are a lot more people working on maintaining the service together then there is the support team and devs etc etc. Just remember how many people were working to get PSN back on track, these people need to be paid too. Now since you don't seem to own an Xbox you don't know what ads are there, there is no way these 3-4 ads can pay up all this workforce.

If Scoobs calculations are any good, do you think 3-4 ads could spend 80mil each to be on Live? Really? I don't think we need exact numbers to realise this is impossible, just common sense. And I thought it would cost way less than that.