How Xbox Live Works

Xbox Live launched in 2002 and continues to expand its entertainment offerings. See more video game system pictures.
Screenshot by HowStuffWorks staff

Microsoft launched Xbox Live to much fanfare in 2002, and the hype seems justified. By 2010, the number of users exceeded 23 million [source: Shaw]. Thanks to the success of newer Xbox 360 consoles plus streaming video services like Netflix and innovative enhancements like Kinect, that number grew to 30 million just one year later [source: Microsoft].

Gaming industry experts agree that Xbox Live was a key factor in the success of online gaming in the 2000s. Besides boosting the number of online gamers worldwide, Xbox Live includes social networking and streaming audio and video. From its earliest days, Xbox Live let you read e-mail, watch movies, listen to music and share photos from your Xbox console. By 2011, Xbox Live boasted the following features and services:


  • Streaming movies and television shows from Netflix and Hulu Plus
  • Sports broadcasts and highlights from ESPN
  • Streaming radio from
  • Streaming music library services from the Zune network
  • Social networking integration with Facebook and Twitter
  • Online payment integration with PayPal

What do users get out of the Xbox Live experience? How do you get started using Xbox Live? Let's first look at the basics of Xbox Live and how you can get in on the action with your Xbox 360.




Xbox Live Basics

The Halo series, launched in 2001, has been one of the most successful game franchises to use Xbox Live's online gameplay.
The Halo series, launched in 2001, has been one of the most successful game franchises to use Xbox Live's online gameplay.

Xbox owners connect to the Xbox Live network via a broadband connection (such as a cable modem). Xbox Live was available for all Xbox models until April 2010, but now it can only be accessed using Xbox 360 consoles. Microsoft's servers allow players to compete against each other or cooperate as a team. The network also adds a social aspect to the online gaming experience, allowing personal messaging, voice chat, online scoreboards and ranking systems.

Besides interacting with your friends, you can also interact with the Xbox Live Marketplace. From the Marketplace, you can purchase and download new content, including the following:


  • New games, including puzzle games like "Bejeweled" or classic arcade games like "Gauntlet"
  • Extended levels or new characters for games you already have
  • Dashboard themes for the Xbox, displayed when you're signed in to Xbox Live
  • Virtual clothing and accessories for your Xbox avatar

The marketplace is broken up into three components on your dashboard: Music Marketplace, Video Marketplace and Game Marketplace. Access to these areas is based on your level of membership. We'll delve into the details of Xbox Live's subscription options later. Though Microsoft has made some marketplace content available for free, many items must be purchased by redeeming Microsoft Points. You have two options for purchasing Microsoft Points: Register a credit card with your Xbox Live account, or purchase a card from your local game retailer with a code that you can redeem online. Xbox Live Marketplace content usually costs 80 to 800 Microsoft Points per item.

Xbox games come in two flavors: Live Enabled and Live Aware. A Live Enabled game uses all the interactive features of Xbox Live. You can play against other people, participate in tournaments and have your scores publicly ranked. A Live Aware game doesn't allow interactive play, but it does keep you logged in to the Xbox Live network and uses some of its features. Game developers must determine which features they want to use, such as displaying notifications for you during the game when you receive chat messages from friends, or posting high scores for the game so your friends can see how you're doing.

We've covered downloads to gameplay with Xbox Live, but before you get started, review the information on the next page to decide what membership tier works best for you.

Silver and Gold

With an Xbox Live Gold membership, you can log in to Netflix from your Xbox 360 and stream some of your favorite movies and TV shows.
With an Xbox Live Gold membership, you can log in to Netflix from your Xbox 360 and stream some of your favorite movies and TV shows.

Xbox Live has two levels of membership: Free and Gold. Free membership, which used to be called Silver, costs nothing but has limited features. At the Free level, you can do the following:

  • Create a profile and a Gamertag
  • Create a friends list
  • Preview games
  • Stream video content from the Zune network
  • Download games and add-ons from the Xbox Live Marketplace
  • Send and receive messages with other Xbox Live users as text or voice
  • Make a video call to a friend using Video Kinect (for Kinect owners)

Xbox Live Gold is a subscription service that varies in cost. As of this writing, you can purchase subscription cards for Xbox Live Gold at about $25 for three months or $60 for a year. Microsoft and other vendors run limited-time specials on subscriptions, both for the cards and for purchasing from your Xbox dashboard. For example, one special from Microsoft in the Spring of 2011 is a Family Pack, which includes four Xbox Live Gold memberships for less than the price of two [source: Microsoft].


With Gold membership, you have access to all the features of free membership plus the following:

  • Interactive online game play
  • Steaming video content from Netflix
  • Streaming TV and movies from Hulu Plus (see the sidebar on this page)
  • Streaming live sports events using ESPN on Xbox Live
  • Social networking with Facebook and Twitter
  • Streaming radio from
  • Streaming music selections from Zune (additional Zune Pass subscription required)

We've just seen the advantages you'll get by going for the Gold. Now let's talk tech about the network and using it on your Xbox 360 console.

Live Technology

The Xbox 360 connects to the Xbox Live network over an established connection to the Internet. All models of the Xbox360 have a built-in Ethernet port for a wired network connection. For a wireless alternative, early Xbox 360 models are WiFi-ready, requiring the addition of a wireless network adapter. The newest Xbox 360 models have built-in Wi-Fi adapters with no need to purchase extra equipment. Before you try connecting to Xbox Live, check its settings to make sure your Xbox 360 is connected to the Internet.

Most Xbox Live content is routed through Microsoft's Xbox Live servers. For the Xbox Live launch in 2002, Microsoft installed massive arrays of servers in four locations in the United States, Japan and the United Kingdom. At that time, analysts estimated that the network costs alone would be $500 million, a quarter of the investment Microsoft reportedly spent to institute its first Xbox console [source: Becker].


The Xbox Live servers boast multiple levels of security. Microsoft controls the entire system from Xbox Live headquarters in Redmond, Washington. However, due to the 2011 security breach of Sony's PlayStation Network (PSN), including reports that users' personal information had been compromised, Xbox Live is under the microscope with users and reporters asking, "Will Microsoft be next?" While Microsoft clearly took advantage of the situation by offering Xbox 360 owners a week of free play at its Gold level, the company has made no statements on what it's doing behind the scenes to keep up its reputation as a secure, reliable network.

There are a few exceptions to exclusive content hosting on Xbox Live. Long-time gaming industry leader Electronic Arts (EA) originally wouldn't produce Live Enabled games for Xbox because Microsoft wouldn't allow them to use their own servers. In 2004, Microsoft struck a deal with EA, and now EA produces Live Enabled games for the Xbox [source: Electronic Arts]. Some of those games make use of EA's own system of user accounts, such as those available for EA Sports Active players. Each Xbox Live Gamertag can be associated with an account, and linking the two is irreversible [source: Electronic Arts].

With the increasing number of online games has come an increasing interest in user-generated content. Microsoft opened the Xbox to the independent game developer community in 2008. In addition, it opened the Xbox Live Marketplace so those developers could make their games, add-ons and other software available for download across the entire Xbox Live network. Microsoft screens each Marketplace contribution in advance to be sure it is secure and meets community standards.

Now that we've looked at the tech behind the Live show, let's examine some of the challenges for Xbox and its users.

Rated Xbox

Don't let a griefer's excessive profanity, taunting or annoying behavior ruin your Xbox Live experience.
Don't let a griefer's excessive profanity, taunting or annoying behavior ruin your Xbox Live experience.

As we've seen, Xbox Live has been a large part of the Xbox console's success. The Xbox 360 continues to fight with the Sony PlayStation 3 for the top spot in the gaming console market. Both receive high ratings from console users and experts alike, and both keep the Nintendo Wii down in the third position. In contrast, as of this writing, the Xbox Live network is still significantly larger than the PlayStation Network (PSN), and it will likely maintain its size advantage while Sony rebuilds its console's reputation following the PSN outage of 2011.

From the gamers' perspective, Xbox Live has some of the same challenges as other multiuser online environments. One of the most prevalent problems is the presence of griefers -- people who seem to derive pleasure from ruining other people's fun. A griefer's behavior can vary, sometimes consisting of constant foul language, racist taunts and playing the game in an annoying, disruptive way. For example, in a racing game, a griefer might intentionally crash into other players' cars instead of racing. Swearing can be a serious problem in games when players are using voice chat. You can mute your voice chat, but that means muting all participants, not just the griefers. Some games allow you to mute individual players, though, to help cut down on the problem.


Xbox Live gives users the tools to cut down on their exposure to griefers. Each Gamertag is associated with a feedback system that allows users to rate each other based on their in-game behavior. Microsoft reports that they review the feedback and punish players who receive a significant number of complaints. Punishments range from warnings to suspensions that can last up to two weeks. Players who abuse voice chat can also be banned from using that added online service by Microsoft.

Another way to fight griefers is to form a trusted friends list and look for those people when you're playing online. Microsoft Research developed the TrueSkill ranking system for Xbox Live to help optimize random matches, based on selections you make about yourself when setting up your console. If you find a good match, consider adding that person to your friends list so you can find each other for future games.

Some of Xbox's other challenges include security and pirating. Though content from the Xbox Live Marketplace is screened to ensure it's virus-free, Xbox users can still fall victim to phishing scams and other security breaches that use social engineering. Players are encouraged to be very cautious of whom you befriend and what information you share about yourself with people you only know online.

In 2009, Microsoft bared its teeth against the Xbox pirating problem. The company banned about one million Xbox Live members from the network because they had downloaded pirated copies of Activision's "Call of Duty: Modern Warfare 2" and modified their Xbox consoles to play them. Though the ban sounded severe, it was only a targeted ban on that particular game. Bans varied in length of time, based on how severe Microsoft judged the individual gamer's situation [source: Terdiman].

Though there are inherent risks in any online social space or financial transaction, many players feel very comfortable logging on to the Xbox Live Network. Have you decided you haven't lived until you've gone Live? Connect over to see lots more information about Xbox Live.

Related Articles

More Great Links


  • Becker, David. "Microsoft pushes Xbox online." CNET News. CBS Interactive. Nov. 14, 2002. (May 16, 2011)
  • Electronic Arts (EA). "EA Reports Strong Q1 Results." Electronic Arts, Inc. July 22, 2004. (May 16, 2011)
  • Electronic Arts (EA). "Help Question: Can I link one Xbox Live Gamertag to multiple accounts?" Electronic Arts, Inc. (May 16, 2011)
  • Hulu. "About." (May 16, 2011)
  • Microsoft. "Xbox Live Membership." (May 16, 2011)
  • Narcisse, Evan. "Xbox 360 Update Includes PayPal Integration, Support for New Disc Format." Time Techland. Time, Inc. May 11, 2011. (May 16, 2011)
  • Shaw, Frank X. "The Official Microsoft Blog: Microsoft by the numbers." TechNet Blogs. Jun. 25, 2010. (May 16, 2011)
  • Sony Pictures Digital, Inc. "Corporate Fact Sheet." (May 16, 2011)
  • Terdiman, Daniel. "Report: Microsoft bans 1 million Xbox Live players." Cable News Network. Turner Broadcasting System, Inc. Nov. 12, 2009. (May 16, 2011)