First you pay your subscription, that one is obvious.
Second you pay with a fraction of a game's price. That is the case with a lot of PC games, and it's not only true for games, which require a minimal amount of server side processing. Games like Guild Wars, or Blizzard's battle.net offer a lot at no cost (apart from that initial fraction I mentioned). Here, you might counter, by saying, that this is only true for games that sell a lot, but don't forget that games that sell less also require less resources in the backend. And of course some games can run everything on one of the players' machines, so nothing additional is required (maybe just a server tracking the current games).
Third - Microsoft puts advertisements to milk some additional dollar from people who have already paid. Ads could make sense for free services like Steam, PSN or battle.net (which I believe are ad free, excluding an occasional promotion for a product they sell). But once you pay, you should not be seeing ads (HBO?).
Finally, a disclaimer – I have no access to Microsoft's account books, so I cannot be definitive that they overcharge. Maybe they do, or maybe they are not using the income from those sources efficiently.
A defense of the sort "if people pay for it, it must be worth it" does not work. Even under a monopoly it might be worth using a product or a service, instead of ignoring it because you perceive its pricing as unjust. That would not make the behavior of a monopolist moral (of course, we have an oligopoly in the gaming market, I was just giving an example).
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