[throwaway894345]

The servers aren't part of the XBox Live infrastructure, but XBox Live provides infrastructure for friends lists, matchmaking, p2p text and voice communication, moderation (banning players), video recording and sharing, etc. They also provide a website, mobile apps, and of course the console experience to interface with these services.

$5/month isn't an unreasonable price tag for these features, and I would happily pay double if it meant that xbox would actually remove some of the hardcore stalkers and overt pedophiles. By which I mean the networks of grown men who coordinate to target certain minors (even though the minors appear offline and block the stalkers) by fanning out across game servers. Microsoft knows about these players because they've been reported so many times and by so many different players that they have the worst Reputation Scores. This isn't to speak of the "ordinary" sexual harassment, trolling, cheating, and "unsporting behavior".