@ Infamy - that could be it... It certainly would explain such lines as
"consumers have spent more than $1 billion on Xbox Live"

[/sarcasm]

It says that more than 1 billion was spent not made. I'm not saying it wasn't made, but they don't say 'made' they say 'spent', and the content they put on there isn't free.

But still, 1 bln is a huge number.

Xbox 360 cards are $50 from retail or $40 from Newegg.

Its possible that online retailers use it as a kind of loss leader to get you to buy other Xbox 360 products from them. So I would pick its margin at between 25-33%, therefore the cards probably cost the retailers between $35-40. Personally I would pick the former margin rather than the latter.

1 billion profit averages out to a measly 41.6million bump in profits each quarter over the last 6 years. Better than a kick to the teeth. If the majority statement is correct and they're now making money on the hardware too they should be raking in some healthy profit margins this year.

Lets say they sell to retailers or make ~$30 each premium member x 8.5million members = ~255 million revenue + growth in install base + content downloads. If the 31% premium member to install base stays true, 360 should be up around 40 million install base EOY and then have ~12million gold subscribers = ~360 million revenue - with no hefty initial infrastructure fee or absolving hardware losses they'll make billions by the end of this generation.

One more company jumping on the XBL bandwagon?

http://www.joystiq.com/2009/01/06/xbla-receiving-hasbro-game-channel-eas-scrabble-coming-to-hand/

Nice to see some more kids/family stuff rounding it out as well as this Hasbro channel/gateway?  Virtual rooms?

Nice.

I wonder if this revenue is counted under the Entertainment division or the Online Services division instead...

That is a good question.

I wonder if Hasbro and Microsoft are planning further stragetic plans.  It would be great if they would ever allow a game made from their old properties for XBLA and the console publishing rights are now available.  C'mon, I can dream can't I?

http://www.youtube.com/watch?v=yL-iBBxzDFo

It says "consumers spent", so this is neither MS' revenue nor MS' profit. It's retail gross, which means you can calculate with $50 per subscription.