During Microsoft's recent Financial Analyst Briefing 2017 (with notes provided by NeoGAF user JINX), CFO Amy Hood and CEO Satya Nadella explained a bit about the business side of Xbox, or more specifically Xbox Live, and how important it is for the company.
Talking about Xbox more generally, Hood started by saying that it is a "critical" asset for Microsoft's future, as it's a business worth billions of dollars, growing in profitability through models like subscriptions such as Gamepass, broadcasting (Beam), and more.
Nadella then explained how investors often look at Xbox in the wrong way. "Most of you view gaming as 'Microsoft has ...an Xbox business,' I think you understand the console economics. But it's a much broader thing for us," he explained, before adding that Xbox Live is the biggest gaming social network and ""monetises far superior to any other social network."
The accompanying slide (pictured below) explains how this works, as this approach brings more revenue per customer than simply selling the customer a console, according to Nadella. This involves the expansion of Xbox Live beyond just an online subscription service, as it's now a social network between Xbox and Windows, supporting cross play on top of that, as well as Beam.
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Is Xbox Live superior to competition right now?