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.

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