According to Kemp Powers in Reuters, Xbox Live's daunting challenge is to attract the casual gamers to go online.

Xbox Live is what has set the 360 apart from its next-gen counterparts, as it was among the first to let players compete with each other online. However, the challenge remains as not only are their competitors now offering similar services, but Microsoft's online service is yet to attract the masses of casual players.

There has always been the impression that Xbox Live is for the hardcore gamers who thrive on competition, thus scaring the casual gamers away. As proof, even in games that were advertised with online play as a main feature, like Halo 2, only a fraction of users actually played online. David Cole, video game analyst and President of DFC Intelligence says, "A lot of casual gamers are intimidated by online in general, both in terms of the technology and the human competition. That's changing, but it still has a ways to go."

In the meantime, Microsoft is offering other features online, such as their download service for movies and TV shows to attract the "living room" audience.

All in all, Cole sums it up, "The key to the 360's overall success is what they'll offer consumers who don't go online."