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Xbox Not Just a Game: Xbox Live Earns More Than $1 Billion

Dennis Durkin, Xbox’s chief operating officer revealed to Bloomberg that in the last fiscal year, the revenue from Xbox Live exceeded $1 Billion. With 12 million or so users paying $50 per year for Xbox Live, with companies producing more downloadable content now than ever before, with downloads breaking sales records, the growth the online service experienced this year isn’t surprising.

But what is the breakdown of that revenue? Microsoft would not provide concrete numbers but Michael Pachter, Research Analyst at Wedbush Morgan, said, “I think around $400 million is DLC, $100 million Xbox Live Arcade, and $50 million each from avatars/microtransactions and movie download/rentals.” And why does he think Live has been so successful? “Xbox Live has been around 4 years longer, and they pay content providers to give them content earlier. Call of Duty map packs came out on XBL first, so did Fallout 3 expansion packs.”

And Xbox Live has grown from being a simple network to play games on, to becoming the center of the living room. Between Netflix and Zune marketplace, Facebook and Twitter, and now ESPN and video chat later this year, Microsoft has diversified the Xbox 360 beyond video games. So what is next for Live? Beyond the video chat, ESPN games with live polls and trivia, gestural controls through Kinect, what will be coming next year to entice the public’s cash into the Live coffers? “Live will keep adding content, and will keep paying for exclusives, and will continue to grow,” Pachter said.KO