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Nintendo and Sony's free options were junk. Microsoft mage a product so much better than the free alternatives that people were willing to pay for it.
Better than on pc, where it was completely free?
In many ways, yes. It was , and still is to some degree, massively more convenient for the couch gamers. That is what you pay for.
Nintendo's paid option is still garbage.
Sony's free options were junk
Not during the PS2 era. FF11, EverQuest Adventures, THPS, MGSO1, Splinter Cell Mercs vs Spies... Quite possibly the best era of online console gaming, IMO.
To be fair, didn't all of those have publisher-run infrastructure to make it work? There wasn't a "Sony Online" presence like there was for the PS3 and later.
They had DNAS about a year into the life of the online services, which acted as a middleman and DRM. Those were run by Sony themselves.
Even now, don't publishers and developers handle everything for their own servers once the Microsoft or Sony servers pass them off to the game itself? Most of the games I have for PS right now just use bullshit P2P systems; me or some other player are basically hosting the server in those cases, and I still have to pay extra for it.
Also I just thought about how totally F2P games like Rocket League and Fortnite do not actually require the PS+, Nintendo Online or Xbox Gold (or whatever it's called these days) subscription to play.