Microsoft Xbox Live: Actually a Real Business Now
Microsoft (MSFT) devoted most of its CES presentations to a sexy but small sideshow--the Entertainment and Devices division--but some of the Xbox statistics were impressive, especially in light of Microsoft's efforts to strengthen its position in The Battle for the Living Room.
E&D head Robbie Bach announced that Xbox Live hit 10 million subscribers ahead of schedule. Most of these subscribers pay $49 a year, which suggests that the recurring revenue portion of Xbox's revenue is approaching $500 million a year. These are small numbers relative to Microsoft's primary profit and revenue engines--Windows and Office--but they're significant.
The Xbox Live subscribers should be especially valuable as gaming consoles continue to morph into multi-use devices (DVRs, DVD players, perhaps one day even regular TV tuners). 10 million represents critical mass, and the major content providers and cable companies will now have to deal with Microsoft, whether or not they want to.
E&D head Robbie Bach announced that Xbox Live hit 10 million subscribers ahead of schedule. Most of these subscribers pay $49 a year, which suggests that the recurring revenue portion of Xbox's revenue is approaching $500 million a year. These are small numbers relative to Microsoft's primary profit and revenue engines--Windows and Office--but they're significant.
The Xbox Live subscribers should be especially valuable as gaming consoles continue to morph into multi-use devices (DVRs, DVD players, perhaps one day even regular TV tuners). 10 million represents critical mass, and the major content providers and cable companies will now have to deal with Microsoft, whether or not they want to.
The simple fact that the company is reluctant to publicly announce how many people are paying for the service tells me the numbers aren't as glowing as they'd like everyone to believe.
Of course, paying or not, all Live members are able to download video content. I believe the only difference between the two tiers is that with Gold you get to play games online and download demos earlier.
"Let’s drill down a little bit on what we see going on Xbox Live. Certainly the largest form of monetization is subscriptions. Predominately that’s $49 a year, there’s a few other plans that you can be on, but most, the vast majority of people who are subscribers, what we call Gold Members are on a $49 a year plan."
It's possible he misspoke or exaggerated, but that's where the "most" came from. Would be great to know churn, gross vs. net, packages, etc. But overall, it still seems like an impressive number.