Sounds like it's making a nice profit for them
Microsoft's Xbox Live reportedly closed a record sales year for fiscal 2010, which ended June 30. According to estimates published by Bloomberg recently, the premium gaming service over this last year managed to break the $1 billion dollar mark collectively through subscriptions, movie and TV show sales, and other downloadable content.
Microsoft itself has been mum about specific sales figures, but the math seems about right: the financial news outfit simply multiplied the number of users Microsoft admits paid the annual Xbox Live fee -- about 12.5 million -- by the average price of $50 and came up with $625 million. They then took Xbox chief operating officer Dennis Durkin's remark at E3 that sales of downloadable content topped subscription revenue for the first time and you have a total upwards of $1.25 billion. By comparison, the company is estimated to have raked in $800 million a year earlier from Xbox Live.
With Microsoft making such a hefty sum from their hybrid subscriptions + virtual goods model it's no surprise rival Sony has taken notice and followed suit. Its PlayStation Network service has offered free multiplayer gaming to all console owners since the beginning, but at its E3 press conference last month, the company announced a new subscription plan dubbed PlayStation Plus offering premium content and services for a yearly $50 fee. Online revenue is crucial for both companies because sales of consoles themselves barely make up for the cost of building the hardware.