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Steve Ballmer and Bill Gates both had a vision of making premium download content and add-ons that would attract many new customers.

Based on this reasoning, the console included a standard Ethernet port (10/100) in order to provide connectivity to common broadband networks, but did not include a modem or any dial-up support, and its online service was designed to support broadband users only.

In February 2013, Yusuf Mehdi, corporate vice president of Microsoft's Interactive Entertainment Business, shared that Xbox Live members now number 46 million, up 15 percent from a year ago, during the Dive into Media conference in Southern California.

In June 2014, Microsoft retracted the Xbox Live Gold requirements to download streaming media apps (including Netflix, Hulu, You Tube, Internet Explorer, Skype, and others), though various rental or subscription fees may still apply.

Microsoft has announced plans to extend Live to other platforms such as handhelds and mobile phones as part of the Live Anywhere initiative.

The Xbox Live service is available as both a free and subscription-based service, known as Xbox Live Silver and Xbox Live Gold, respectively, with most features such as online gaming restricted to the Gold service.

The service was extended in 2007 on the Windows platform, named Games for Windows – Live, which makes most aspects of the system available on Windows computers.

The online features, while praised as innovative, were largely considered a failure, and the Dreamcast's immediate competitor, the Play Station 2, did not initially ship with built-in networking capabilities.

Microsoft, however, hoped that the Xbox would succeed where the Dreamcast had failed.

The company determined that intense online gaming required the throughput of a broadband connection and the storage space of a hard disk drive, and thus these features would be vital to the new platform.

This would allow not only for significant downloadable content, such as new levels, maps, weapons, challenges and characters, to be downloaded quickly and stored, but also would make it possible to standardize bandwidth intensive features such as voice communication.

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