Microsoft's Xbox Live "probably" broke $1 billion in revenues for the fiscal year ended June 30, thanks to paid subscriptions and sales of content like game add-ons, movies and TV shows, Bloomberg reported Wednesday
About half of Xbox Live's 25 million subscribers are Gold users who pay a fee for the service, Microsoft says. At $50 per year, the company generates about $600 million from those fees. (Microsoft and game publishers also offer free limited Xbox Live trials, and occasionally discounts the subscription fee through promotions.)
Xbox COO Dennis Durkin told Bloomberg that for the fiscal year, sales of downloadable content including TV shows, movies and game items exceeded paid subscription revenues for the first time. Combined with the $600 million paid subscription estimate, digital content sales would push Xbox Live revenues to over $1.2 billion. Microsoft does not specify Xbox Live revenues in its earnings.
That total figure is in line with estimates from Goldman Sachs analyst Sarah Friar, who pegs Xbox Live sales at $1.1 billion during the past fiscal year, up from $800 million. She also said that Microsoft could grow sales at a rate of "mid-teens to 20 percent" annually.
Paying Xbox Live Gold subscribers have access to more online features, namely online multiplayer gaming, which allows users to meet up with friends and other Gold players.
"I was skeptical in ‘02 -- I thought [Xbox Live] was stupid," said Wedbush analyst Michael Pachter. But it's clear now that Xbox Live drives loyalty and plays a large part in retaining Xbox customers. "If your friends are all playing on Xbox, you get an Xbox. If they’re all on Xbox Live, you get Xbox Live."