http://weblogs.variety.com/the_cut_scene/2009/02/comparing-playstation-network-and-xbox-live-revenue-is-what-matters.html/

Comparing Playstation Network and Xbox Live, revenue is what matters

As Sony announced yesterday, Playstation Network has 20 million users.  Xbox Live, by comparison, has 17 million But PSN is for the Playstation 3 and PSP (around 70 million devices), while XBL is only for the Xbox 360 (about 28 million). PSN has been around for 27 months. XBL? 67.

What does it all mean? Who knows? There are dozens of variables that make comparisons difficult. But more importantly, "registered user" statistics are virtually meaningless. How many websites have you ever registered for? "Second Life" has over 15 million registered users, but it's struggling to survive and find a reason for being.

 If you're interested in the business of video games, there's only one statistic of any significance: Sony has generated $180 million in gross revenue from PSN two-plus years of life. As of the last E3, after about five and a half years, Xbox Live had generated over $1 billion.

On that basis, the advantage goes to Microsoft. PSN has been around about 40% as long as Xbox Live, but made less than 20% as much money. Given how much more content there is available to download on consoles today (more games, video content, etc.) than the first few years of XBL, the advantage is even more dramatic.

EXCEPT... A little more than half of XBL members pay for the service. Without knowing how long they have paid for, and under what plans, it's tough to  estimate with any precision how much revenue that has generated for Microsoft. But it's safe to guess it's well into the hundreds of millions.

So on download revenue, the two might be roughly equal. But Microsoft still has an advantage. Revenue, after all, is revenue. And running Xbox Live certainly costs, ballpark, about as much as it costs to run Playstation Network. So Microsoft is making more revenue on around the same costs.

Sony's reason for making PSN free is, of course, to make the Playstation 3 and PSP more attractive. But given the weak sales of the PS3 and so-so sales of the PSP (whose main competitor, the DS, also offers free online play), it's not particularly working.

I think it's really tough to argue that, at this point, Sony wouldn't be better off by cutting the price of the PS3 as much as possible and making up at least some of the difference by charging for online play via PSN.

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The article is not accurate. The revenue created on the Xbox360 till E3 2008 was 1 billion, but this is the revenue for the time when the Xbox360 launched till E3. So that is 2 years 8 months. Or 32 months, not 67.

You can find it here: http://www.youtube.com/watch?v=OVe9j-Cdt5g&feature=channel_page

And right now with 17million users and 60% of them paying to play, MS generates more than 500 million USD every year just with the fees.

I thought MS had more Live members?

No. Less than PS3 and PSP combined. More Live members than PS3 members, for sure.

They do!

MS counts:

• unique Xbox Live users

Sony counts:

• PS3 accounts
• PSP accounts
• Playstation Forum Accounts (!!!)

I thought profit was the thing to go for, not revenue?

Because most of the times someone posts revenue on this forum, the immediately snapback is "profit is what matters".

Yes, MS has a smart strategy of having a cheaper console initially, though one of its extra costs being a $40-$50/year charge to play games online. 

That's a game per year!  (buy used occasionally)

As fans, it would be perverse for us to like the company that takes more money from us relative to what we receive from them.   I realize it's debatable which company that is.  As fans and consumers, loss leaders are our friends.  Free online certainly is.

A) most people who have a PSP and a PS3 use the PSN with both, especially since until recently you more or less had to have a PS3 to get any utility out of PSN with the PSP.  The number of PSP only people who use PSN is almost certainly pretty small, certainly not more then the 3+ million that would put PSN users below live users.

B) Live without payment is more or less meaningless. What can you do with live Silver? Watch trailers, download games and have a friends list. That is really about it. Silver is meant as solely a way to funnel people into gold (with a 50% success rate). PSN on the other hand is fully functional so that whole 20 million can play games online and do everything a gold member can do except pay 49.99 a year.  I would rather have the full population able to play multiplayer games with me then a population that is only half online game capable.

C) if you use game for windows live (which some new games like Fallout 3 encourage and other new games like dawn of War 2 more or less require) you are included in that total. So if you are going to accuse Sony of double dipping you certainly have to say the same about Windows Live. They DO roll them together, in fact if you get achievement on a windows game it now posts to Xbox live (check impulsivity, my live account, it has achievements for Dawn of War 2 which is PC exclusive).

D) are you really citing Microsoft making you pay to play games online (which neither the PC, nor the Wii and PS3 does)? I mean that revenue is almost all you and others like you being extorted for 5 bucks a month to play games MS by and large did not make online. I would rather buy a new game then pay every year to play Call of Duty on live with that 50 bucks thank you.

In terms of revenue thats not from a service fee for use of full features, I would doubt that Live is ahead (in terms of game/media sales and the like, which is where Sony is getting their PSN revenue). Overall there are more exceptional games on PSN as well (and the best games aren't just available on the PC like with most Xbox live games like Braid.)

If you are not into online-gaming at all, why should you chose the console that offers free (but worse) online gaming, but costs a whole lot of more money?

   Name one way in which playing on the PS3 is inferior.  I can even play games like UT3 with mouse and keyboard (which I most certainly can't do with the 360).  The service is reliable, match making is fast, there are friends lists, leader boards and all of that.  The PS3 even has a built in browser to allow for great stats integration for titles like Killzone 2 that MS can't match.  There are also developing areas in home which are pretty cool (like the EA section complete with playable games and rewards) and tons of free user content in games like Little Big Planet.  The games are better too (the PSN downloads) and not available on the PC in most cases.  There is not a single way live is better but many ways PSN is not least of which is the cost.

    I cannot think of one way in which the PSN is inferior to Xbox Live Gold except in that it generates 50 less dollars a year in revenue for MS.  Have you ever PLAYED a game on the PSN?  It's friggin golden.  Also again EVERY PS3 OWNER CAN USE IT, so if you have a friend with a PS3 and game X you can say "hey lets play game X online tonight" and he will never ever say "oh I haven't paid 50 dollars to Sony this year, I can't play online games with you" which half of 360 owners have to say about paying MS.

Because PS3 has advantages other than free PSN. I agree that 360 looks more attractive if you decide you aren't going to play online, and therefore don't have to pay for online gameplay.

I'll get a new SKU 360 some day and buy used games and continue to play online on PS3.

And I'll point out that the example of 360 being better IF you don't play online is in tension with the more-commonly-used argument that 360 is "better" b/c of the privilege of having XBL (in part b/c it makes more money or something, I guess...)

@Implusivity: great post...