As of April 15th, 2010 there will no longer be any Xbox Live service for anyone using the original Xbox console. The reason given for the cut-off, via Xbox Live’s Larry Hryb’s blog:
“This change will allow us to continue evolving the Live service with new features and experiences that fully harness the power of Xbox 360 and Xbox Live community,”
Auto-renewals for Xbox Live will be shut off for those effected as well. So you will not be charged when your service is disconnected. The system removal will not have any effect on Xbox 360 users, though original Xbox games will also be removed from the list of playable games on the service itself.
As for the future of Xbox Live Microsoft has also been very cryptic in what is to come:
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. I believe we’ll look back on 2010 as a landmark year in gaming and home entertainment, and I couldn’t be more excited about what we have in store with “Project Natal” and LIVE. The LIVE community is the driving force behind everything we do, and it’s because of the community that ground-breaking experiences on Xbox continue to be possible.
Cryptic and teasing.

February 5th, 2010
Brad McGraw
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