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Xbox Live made $1bn last year

Over half of Live's 25 million users pay Gold subscription, claims report

Microsoft made over $1 billion from Xbox Live last year, a Bloomberg report has claimed.

According to the report, "about half" of Live's 25 million users paid an annual Gold subscription in the year ended June 30, which made Microsoft an estimated $600 million.

Sales of digital content such as movies and TV shows topped subscription revenue for the first time, according to Xbox COO, Dennis Durkin, Xbox, which suggests that the service made more than $1.2 billion in sales last year.

Xbox Live made approximately $800 million the year prior, Bloomberg reports.

Goldman Sachs analyst Sarah Friar believes that Xbox Live has gross margins (the percentage of sales remaining after deducting production costs) of about 65 per cent.

Matt Rosoff, an analyst at Directions on Microsoft said of the numbers: "Xbox Live has helped sell a lot of consoles and created a lot of loyalty. Everyone has been talking about Microsoft's inability to innovate, but this is a pretty good example where they have innovated. They timed it just right with this one."

Microsoft launched Sky on Xbox Live last year and unveiled plans to integrate ESPN into the service at E3 last month.

So, how much do you reckon it costs Microsoft to run all those Xbox Live servers?

[ SOURCE: Bloomberg ]