Storage isn't the problem. The reason it's so expensive is because these servers need to have a huge uptime with the loado f work they are doing, it takes alot of redundancies which costs money. They are also paying for all the transfer of data between server and your 360, it takes major bandwidth to be able to serve all of those people simotaniously. Then there is the cost of staff to work on them all and staff to write patches, updates and fix bugs.