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Gamers lost far more than we gained when Microsoft walked back its digital future.
In the weeks leading up to and following E3, it seemed that Microsoft couldn’t open its mouth even a hair without immediately inserting the feet of its entire PR department. Every single “feature” of the system was a direct salvo at gamers, a clear indication that Microsoft was preparing to profit hand over fist over the whimpering, broken body of its customer base.
And then, in a David vs. Goliath, Jack vs. the Giant shake-up, Microsoft looked at all it had wrought... and blinked. And now the Xbox One won’t phone home, won’t restrict resales, won’t do any of that awful anti-consumer stuff. Consumers win! CONSUMERS WIN!
We also lost. This is of course speculation, fueled by a combination of my own logical conclusions, Microsoft’s stumbling PR, and the unverified claims of an Xbox One engineer made in this pastebin post. But in my eyes, here’s what really happened:
No more discless gaming. The Xbox One was conceived as a Steam-like library of games. You walk into your living room, say “Xbox: on,” sit down, say “Xbox: play ,” and within 10 seconds or so you’re already in the thick of it. Even better: walk intoyour friend’s living room, say “Xbox: on,” and every game and DLC you own is instantly available. While these functions haven’t been totally lost, they now only work for your digital purchases.
No more digital trading. Microsoft had outlined a system by which you could sell your games directly to other users through the Xbox One Marketplace. They even continued to support the Gamestop used-disc model via license transfer. In practice this was no different than the current generation’s system of used sales, with one important exception: game publishers (and therefore developers) would have the opportunity to see income from secondhand sales, which currently go exclusively into the pockets of resellers (specifically Gamestop, since they’re the only real player in that market).
Many critics claimed this was a blatant money-grab by Microsoft; I see it as sending at least some of the profit from secondhand sales where it belongs, back to the content creators instead of pocketed by the middlemen.
No discounts, and higher prices. One of Microsoft’s major goals was to be able to offer a service similar to Steam, whose greatest asset is its ability to offer outrageous discounts on even recent releases. That ability is entirely due to the fact that there is no used PC game market, and Steam controls every purchase on its system. Managing game sales as licenses in this manner would have allowed Microsoft to create the same kind of market that Steam has: they could have offered sales on select games (both new and old) as well as faster and steeper permanent discounts on “back-catalog” content. Consumers would have been the winners here just as much as Microsoft.
The fact is that the current price of games - new, used, and older games alike - is inflated by the existence of Gamestop’s used market. When Gamestop sells one new ($60) and one used ($55) copy of a game, only the first results in profit for the publisher and developer - and they have to charge more for that new copy in order to cover their costs. Contrast that with Steam, where two copies of a game sold at $25 each result in more profit for the publisher/developer and a better value for the consumer. Consumers win again, and the profit goes where it is of most value to the system: back to the content creators.
No “family sharing.” Microsoft’s original plan would have allowed you to authorize nine other Xbox Live accounts (your “family”) to have access to your game library. Without license authorization to deter piracy, this plan is dead. Marc Whitten, VP of Xbox Live, said as a result of the change family sharing is something “we won’t be able to deliver at launch” (Kotaku), which hopefully means they still want to do it eventually. I’ll keep my finger crossed, because family sharing was another fantastic example of how a digital, connected marketplace would have benefited consumers.
Now before I’m crucified (or simply accused of being in Microsoft’s pocket), I readily agree that there were serious flaws in Microsoft’s original plan:
Region-locking. Among those rolled back today, this was a no-brainer. We are a global economy, and we should act like it.
“Always online.” I’m putting this one in quotes because it’s the single biggest piece of fabricated misinformation in this whole debacle. The console required a daily check-in, not a constant connection. Many of the games shown at E3 required a connection, but that was in no way unique to the Xbox One. That Microsoft had to “agree not to do this” is testament to the power of loud liars to shape public perception.
Daily check-in. Of course, this was Microsoft's single biggest misstep, and possibly the catalyst that sent everything else spiraling out of control. It’s easy to see why the check-in was originally implemented: in their vision of a disc-less future, Microsoft needed a way to deter “casual piracy” - the simple act of installing a game and then handing the disc to a friend. The PC gaming industry solved this problem years ago by doing exactly what Microsoft tried to do: turn each disc into a single-use installer. It’s actually impressive how far they went to preserve the used/trading ecosystem with license transfers and even digital resale, but all anyone ever heard in the discussion was “phone home every 24 hours.”
We lost too much when Microsoft walked back its policy today. And as something of a eulogy for that lost potential, here are a pair of suggestions that might have bridged the gap between Microsoft's future and the regressive policy we ended up with.
Option 1: once-only authorization. The system remains unchanged from Microsoft’s original vision, with one exception: instead of the daily check-in, games only need to be authorized once - when they’re installed. Every new physical game purchase would come with a single-use code. All of Microsoft’s original “digital future” ideas would remain in place - your disc would effectively be a coaster, but it would be possible for both Gamestop and individuals to obtain a new license key (allowing both person-to-person resale and retail resale).
Once-only authorization would be a bitter pill to swallow for both Microsoft and publishers, since spoofing a single authorization is much easier for pirates than a daily requirement. However, it would solve nearly all the legitimate issues raised by critics of the daily check-in; for instance, soldiers without an Internet connection might not be able to play *new* games, but would never lose access to the games they had already authorized.
Option 2: opt-in authorization. Every retail disc would ship with a scratch-off authorization code. Gamers would have the option during install to enter this code and digitally validate their copy. Consumers who chose not to do so would effectively get the “world” that Microsoft described today when they walked back their policy: disc-in-drive play, no restrictions on lending or resale, etc. Consumers who chose to scratch off and enter the code would “digitize” their purchase and gain the additional perks of disc-less play, online library, etc.
Resale would still be possible whether or not the code had been used, as Gamestop would purchase new licenses in bulk and include them if necessary with used purchases. Obviously a codeless disc would have a lower trade-in value than a disc with an unused code.
And a missed opportunity: One last thing I wish Microsoft had capitalized on is game sharing. Amazon’s Kindle service allows users to loan books to other Kindle users, with the following restrictions: each book may only be loaned once, for up to 14 days, and is unavailable to the original owner for the duration of the loan. It’s actually a lackluster option compared to family sharing, but it would have been an additional pro-consumer move and wouldn’t even have had too negative an impact on sales (thanks to multiplayer and DLC providing value past the 2-4 week window of the loan).
That’s all I’ve got for the Xbox One. The system Microsoft re-announced today is effectively nothing more than a shinier, faster Xbox 360, and that is a damn shame. I for one am ready for a digital future, and I hope that Microsoft can find another way to introduce what should have been heralded as incredibly forward-thinking and game-changing ideas. Good luck, Microsoft.
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