Xbox Live launched in North America on November 15, 2002--the first anniversary of the Xbox's launch--requiring a $50 'Xbox Live Starter Kit' which packed a one-year subscription, a headset and demos for Whacked! and MotoGP.

While the Xbox was not the first console to support online play, Xbox Live certainly revolutionised it. At launch it packed a unified 'gamertag' user account with friends lists, matchmaking, voice communication and downloadable content. Xbox Live Arcade brought downloadable games and demos in November 2004, then run from a disc.

"As we look down the road, we'll continue to evolve the service with features and experiences that harness the full power of Xbox 360," said Xbox Live general manager Marc Whitten. "To reach our aspiration, we need to make changes to the service that are incompatible with our original Xbox v1 games."

Backwards-compatibility is reportedly why friend lists are limited to 100 people, while the same source says the enduring popularity of Bungie's shooter Halo 2 was a large motivating factor behind Microsoft's decision not to discontinue Xbox Live sooner.

"'Halo 2' has had an amazing run on LIVE, with a dedicated community more than five years after launch and well into the next generation of consoles," says Whitten's letter.

Whitten ends on a chipper note, promising "We'll share more details soon, but in the meantime I want to assure you that the best is yet to come for Xbox LIVE."