Sony is probably not making a big profit from PSN, but hey, some money is better than losing money right? Trailers, demos, PSN games etc should be making Sony a little profit by now. Qore maybe only available in the US, but i'm sure its making a decent amount there. As long as they're not going into the red with PSN, there shouldnt be anything to worry about.

With the amount of money M$ is dumping into R&D (see last qtr's report), it's fairly obivous that it's going to pay off in the end. This is the benefit of charging customers for XBL for full service...btw...XBL free...PREMIUM XBL is what is $$ to consumer, which makes sense. Name many good games that are free...crickets are creaking....?

I think you're missing the point of the original post.

Let's assume that Sony is profitable with PSN for the moment, because that's where all the argumentation seems to be. If they are, then Microsoft is much, much more profitable -- both because they have more DLC on XBL than PSN has, but more improtant, because XBL generates 50$ a year from every gold customer.

If we assume everything else is equal (which again it probably isn't, as Microsoft has had the Video Store up and running for years, and considerably more DLC available to all users, but I'm trying to be as conservative as possible), and assumign a conservative estimate of 4 million gold subscribers, that's 200 million dollars a year in revenue that Sony has no comparison for.

It's like they're the same services... except Microsoft makes 200-300 million dollars more.

 Finally somebody got what I was trying to say. Imagine MS would use this money for their internal developments (4-5 highest budget exclusive games) or for buying exclusives etc.  MS might be very happy how thinks work in the online-business of the consoles right now.

MIcrosoft is making loads of cash and idk about sony either they are losing it or making very little at all

The point was gotten, but it's important what this money allows M$ to be able to accomplish.  Let's not forget, M$ shaved about $20-25 bln of free cash over the past 5 years, because sitting cash is goot, but it starts to fester.  Looking into the financial statements over the past year, they've invested HEAVILY beck into the business, and that's key for the future experience XBL customers, free and paid, will enjoy.  I'm not going to question the business acumen of Sony or Nintendo on this issue, but I'll say this much, XBL structure allows M$ with a large fund to do the R&D work needs to push the XBL experience to the next level, imho.  I think avatars are only the tip of this huge iceberg sailing into view.