Realised I haven't replied to the OP.

There are two ways in which future online gaming can go:

1. Live continues to be successful to the point where other services (PSN, Nintendo online) start charging a subscription to play as they see it as easy money.

2. Microsoft start to lose customers or Live's Gold subscription rate slows right down; the number of people willing to play to play their games online either decreases (in which case they go to Sony, Nintendo or PC) or stays constant (growth rate of subscriptions levels out). They change their subscription system so people can at least play online for free, even if slightly limited (e.g 15 hours a month).

I honestly see option 2 as the more likely. Rival services are now reaching parity with Live in terms of features and apps. If we look outside the network infrastructure, many big online games/MMO titles are now going Free-2-Play. Only the likes of World of Warcraft is still charging people. Developers and publishers are finding new ways to make money, even if it's simply selling virtual hats. As consumers get used to the gradual shift to free-2-play, Microsoft's subscription system will start to seem more archaic.

It gives us access to what we prefer.

Whether it be apps exclusive to the 360, software exclusive to the 360, and all the extras you can do on other platforms.

Now give it a rest.

Lol I really don't care if people pay for live. I already said that if you want to pay for it then go right ahead, it's your money not mine. I'm just stating my reasons as to why it's not worth paying for as a service.

Don't compare necessities to luxuries. Food and clothing are NEEDS. Xbox live is a WANT. 

I made it just for you. Once I saw your sig I decided to completely obliterate the Forza Vs GT war. =)

But those necessities are treated as luxuries. Do you buy the cheapest clothes and food? No. You don't just get what is required. You go beyond and spend more to get what you prefer.

Necessities are not luxuries. A necessity is something that is essentially required in order to sustain survival. It's defined as "the fact of being required or indispensable", whereas a luxury is simply something you purchase because you have the money for it. I am 100% sure someone can live without paying for xbox live (want) but they won't be able to survive without things we take for granted such as food/water (need). Maybe you were brought up in a rich* family and you just think differently.

If it were not as good as it is, I would not prefer a free service.

It all goes back to people being perfectly ok with paying for a service if it meets a quality that warrants the price. People can agree that it's worth it or disagree. I wouldn't want a lesser quality service for free. I pay for Live simply because it is faster and more realiable and has more features than PSN. Taking those out for lesser quality to make it free like PSN, well then you're just left with two slower, disappointing services.

Gaming is a want.