Xbox Live is pretty much the centerpiece of the Xbox 360 experience. It isn't required to enjoy the Xbox 360, but if you don't use it you really are missing out. It lets you play games or chat with friends, it lets you download demos, games, and more, and you can even watch Netflix or ESPN or (coming soon) Hulu programs.
-Xbox Live Gold vs. Free
Xbox Live is available in two flavors. The Free version (formerly called Xbox Live Silver) lets you download demos and games and send messages to friends, but you can't play online or use some other features such as Netflix or ESPN.
Xbox Live Gold is a paid subscription service that costs $60 per year (though you can usually find it for $40 or less if you look for deals, read our How to Get Xbox Live Gold For Less article for details), and with that subscription you can play online with your friends, watch Netflix and ESPN, get earlier access to demos, and more. Gold is definitely the way to go. Online services from Nintendo or Sony may be free to play with your friends, but Xbox Live is generally agreed upon to be the best of the bunch. Better services, better speeds, better reliability - you do get what you pay for here.
-Xbox Live Cards and Microsoft Points
You can buy Xbox Live subscriptions either on your console via credit card, or at retailers in 1, 3, and 12-month subs. We do not recommend that you buy or renew your subscription via credit card on your console, however, because it sets you up for auto-renewal and it can be difficult to turn off. Use subscription cards from retailers instead.
The currency of the Xbox 360 is MS Points. They exchange at a rate of 80 = $1, and you can buy them in either in stores for $20 (1600 MSP) or $50 (4000 MSP) or on your Xbox 360 via credit card.
You can activate Xbox Live Subscription or Microsoft Point codes either on the Xbox 360 console or by visiting Xbox.com.
-Xbox Live Marketplace The Xbox Live Marketplace is where you download demos and much more. You can download full versions of Xbox and Xbox 360 games, Xbox Live Arcade games, demos, and Indie Games. You can also buy TV show episodes and save them to your Xbox 360 or even rent high-definition movies. There is also Twitter and Facebook support so you can update your friends on what you're doing right from your Xbox 360 dashboard. You can also watch ESPN shows or games broadcast live, but this feature requires that you have an ISP with an ESPN agreement (not all do).
-Xbox Live Arcade
The Xbox Live Arcade is a collection of games available for download for anywhere between $5 (400 Microsoft Points) to $20 (1600 Microsoft Points). The games range from classic arcade games to modern re-releases to completely original games designed specifically for XBLA. New games are added every Wednesday. For many gamers, the Xbox Live Arcade is the highlight of the Xbox 360 experience. There are a lot of really great games available on the service.
-Netflix
Watching Netflix on Xbox 360 requires that you have an Xbox Live Gold membership as well as a Netflix subscription. You watch movies or TV shows from your Netflix Instant Queue, which you can update an organize either on your PC or your Xbox 360.
Xbox 360 Games
Of course, the real reason you should get an Xbox 360 is because of all of the great games available on the system. The Xbox 360 has been around for almost 6 years now, and in that time a ton of great games have come out to suit any taste. Sports, shooters, music, RPGs, strategy, racing, and more are all on Xbox 360. We have our top picks for the best of each genre in our Xbox 360 Gift Guide, or you can see all of our Xbox 360 game reviews here.
Accessories
Extra controllers, steering wheels, arcade sticks, Wi-Fi adapters, memory units, and more are all extra accessories you can consider buying for your Xbox 360. We have reviews and picks for the best of the best here - Xbox 360 Accessory Reviews.
Backward Compatibility
The Xbox 360 also allows you to play more than 400 original Xbox games. Not every game works, but most of the best ones do. Playing these games on the Xbox 360 also gives you a bump up in graphics, which can make some OG Xbox games look surprisingly nice even today. You can no longer play original Xbox games on Xbox Live, unfortunately, but their single-player portions still work just fine. You can see a full list of all of the backward compatible Xbox games, with our recommendations for the best ones, right here.
Media Capabilities
In addition to playing games, watching Netflix, and everything else the Xbox 360 offers, you can also use it as a media hub. You can stream music, movies, and photos from your PC to your Xbox 360 over your local network. This is a great way to be able to watch videos or look at pictures with friends and family on a nice big TV screen. Streaming music from your PC instead of ripping it to your Xbox 360 hard drive is also highly recommended over wasting space on your HDD. You can also watch movies, use music, or view pictures off of a USB flash drive plugged into the Xbox 360 as well.
