It would be interesting to see their breakdown. According to the source article, analysts estimated US$200 mil for XBL development alone, > USD $1b on XBL since its inception, and USD2b for XBL + XB360 over 5 years ?
The XBL number seems too high compared to the XB360 part. Let me know where I go wrong. I would guess the major cost would be bandwidth + hosting, man power and marketing.
Hardware and Licences
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Hardware + software costs are usually amortized over 2 years (or more), and recent advance has lowered this ticket item substantially (still tens of millions *list price*). MS should use their own software, and probably practise internal charging here. So part of the $$ spent here goes back to MS.
Bandwidth + Hosting
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For bandwidth + hosting of game community services, I don't think it's beyond traditional community services cost. The tight integration between different XBL components may place a tighter load on the servers though (but certainly not hundreds of millions more).
For content download, XBL bandwidth needs may be much higher than Internet file sites due to significantly larger files (> 1 Gb ?). I wonder if they are using bit-torrent in the latest version to alleviate the load.
In any case, we don't know if XBL is hosted on the same infrastructure as MSN. If so, they could leverage on the economy of scale, and even practise internal charging again. If so, part of the reported $$ goes back to MS.
Development & Ops Man power
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All expensive American developers ?
On the community front, development of many gaming support and community functions.
On the gaming front, there should be lot's of effort to integrate, test and support client-server and peer-to-peer network code into many games. This is the tough part given so many implementation approaches.
For ops, there's also manpower to handle billing, system and network admins.
Sales & Marketing
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Then sales & marketing people to get publishers to support XBL and XBLA. Also to pull relationships to release XBox loyalty card. They may need to inject some money into the loyalty scheme so that the points can be used to exchange for something, or more likely pay an existing loyalty card company to run it.
Plus any Market Development Funds to incent developers and also promote XBL. The "Ring of Light" and other unsuccessful (but probably expensive) campaign $ should come from elsewhere.
Not to forget funds dedicated to XBL primary or secondary market research.
Logistics
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Logistics for XBL (cards) should be pretty straightforward and can be tapped onto existing Xbox channels.
Customer support
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Customer support is a wildcard (Usually Passport login issues, billings, and cheat complains. XB hardware support calls should be counted separately), but part of this can be (has been) outsourced based on some negative forum postings.
Others
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Mistakes, made by Microsoft that requires rework. I think in the early days there may be rework to fit Passport into XBL. Some large developers such as EA was not comfortable with Passport having access to their customer information (Remember XBL started at ground zero and MS published competing sports games at that time). So Microsoft may have to revamp Passport to handle additional business needs.
It also depends on how they do their accounting.
My gut feel is it is possible to develop and run XBL below USD 500 million if they spend their dollar well, especially now that it is relatively well established. They may be able to streamline it even better.