Right now, Microsoft has lost around $3 billion from sales of the Xbox 360. This is because they are forced to sell the console at below manufacture costs -- and because a vast amount of consoles over the first couple years of 360s have tended to overheat and need expensive refurbishing under warranty.

So one way they are making money is from licensing, and the other is from Xbox Live.

Eventually, however -- provided Sony ever recovers from its Playstation 3 blunders and also somehow comes out with a decent competitor to Xbox Live -- Microsoft will discount the annual subscription fee ... and at some point could make it free. But I wouldn't bank on the free part. The discount, yes.

When will that be? Not for at least two years. More likely 3 to 5 years. Again, if Sony gets it together. Nintendo is not a competitor. Xbox 360 owners and Playstation 3 owners are buying Nintendo Wiis. Nintendo has no competition right now and will not for the foreseeable future.

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XLC Support Team
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