Make no mistake, Xbox 180 is good news

24 Jun

Games XboxAs a sometimes-contrarian myself, I can appreciate the efforts professional opiners sometimes take with the news of the day. But there are occasions when contrariness for contrariness’s sake is just plain silly.

Gizmodo’s take on last week’s U-turn by Microsoft on the Xbox One – now known colloquially as the Xbox 180 – is a good example. The company beat a hasty retreat on its previously announced policies on used and traded games, which would have greatly limited if not eliminated the popular consumer options, in light of major opposition to them. Microsoft capitulated to the status quo and said the Xbox One will instead continue to support second-hand games without restrictions when it launches in November.

In his article, Gizmodo writer Kyle Wagner suggests “the Xbox One just got way worse and it’s our fault,” mainly because Microsoft’s vision for games was a purely digital one, without all the downsides of discs. Digitally downloaded games don’t get scratched and you don’t have to get up off your couch to change them. Moreover, the company’s plan would have let players share their downloaded purchases with up to 10 people and resell them, at which point it’d be the game publishers and not retailers such as GameStop that would make the money.

This is the key point, Wagner wrote, because it would allow games to come down in price. Rather than charging consumers $70 a pop as they do now, publishers would have more flexibility if they were getting a cut of resold games, which they don’t now. Perhaps games could be $50 or less under this scheme? As he suggests:

Publishers [currently] KNOW that they will not make money on resold games, so they charge more to you, the first buyer. You are paying for others’ rights to use your game in the future. If the initially proposed system had gone into place, you would likely have seen game prices drop.

That’s a nice fantastical possibility, but it’s just not rooted in reality. If that were indeed the plan by publishers and Microsoft, why didn’t a single one of them say so during the whole Xbox One fiasco? Used game discs – and GameStop’s entire business model – would be on the fast track to extinction had one publisher, any publisher (even Microsoft itself), come out and said, “Hey, we know you’re not going to like this whole DRM thing, but guess what? We’re now going to sell all our new games for no more than $50.”

No one said that because no one would do it. History has shown that publishers are only interested in extracting more and more dollars out of consumers, whether it’s through additional online passes on used games, day-one downloadable content that could easily have been included on the game disc, or micro-transactions up the wazoo. Consumers are understandably wary of giving up their purchase rights when there’s no guarantee they’ll get anything in exchange.

The other issue with Gizmodo’s article – with Microsoft’s reversal, actually – is the lament about how the company has taken away the ability to share digitally downloaded games with family or friends. A fellow journalist remarked to me how this was really too bad, because he could have bought a game, then shared it with his brother who lives on the other side of the country.

In the first instance, Microsoft was pretty sketchy about exactly how this was going to work. The cynically minded could be excused for saying it sounded a little too good to be true. But in the second instance, is there any real reason why the company couldn’t still do this, or did executives simply cancel the plan out of begrudging spite on the disc issue? It sure looks that way.

Contrary to the contrarians, the Xbox One has not gotten worse because of the reversal – it has simply returned to reality. While other media – music and movies in particular – is now largely digital and cloud-based, ownership of actual physical games discs is still going to persist for some time for several reasons. Believing it won’t is at this point fantastical thinking.

The main reason is cost. As long as publishers are charging $70 for games, the first-sale doctrine – where buyers can recoup some of their hefty initial outlay through resale – will continue. If they want buyers to give up their ownership rights, they’re going to have to give assurances in the form of lower price guarantees for doing so.

Publishers and console makers can also try to cut out pesky used-game retailers such as GameStop by going completely digital, but then those pesky retailers are likely to turn around and stop selling consoles. Such retailers make very small margins on the hardware and virtually all of their money on the games themselves – giving up consoles will hurt them a lot less than the manufacturers.

The entire business is pretty much entrenched, with every stakeholder – from console maker to publisher to retailer to consumer – needing each other. There’s no doubt the industry is ripe for disruption and that the future of games is cloud-based and all digital, but none of that is likely to come from an existing player. It’s going to take an outsider to achieve Microsoft’s vision.

Say, isn’t the Ouya launching this week?


Posted by on June 24, 2013 in microsoft, video games


6 responses to “Make no mistake, Xbox 180 is good news

  1. Marc Venot

    June 24, 2013 at 12:21 am

    Why you say nothing about Steam?

  2. KowZ

    June 24, 2013 at 9:41 am

    I’m pretty sure one of the Microsoft Engineers cleared up the sharing with 10 people was only a timed demo anyways. But, I think Microsoft went the wrong way with this disc thing; they should have done the following: Installing to the HDD requires an internet connection to verify the license could be transferred to that console; once the console is licensed, the game can be played offline if the disc is in tray, or can be played without the disc if the console is online [with a 1-hour grace for internet interruptions]. The transfer mechanic would then see you deactivating the license on all of your devices before the disc could be transferred. That way you can protect licenses from duplicating, and still give people disc based gaming in areas with little to no internet access [after a game is activated; it’s a compromise that you’d need to activate the game outside of your nuclear sub, but hey, that’s not too awful is it?]

    Instead, Microsoft has turned the Xbox One into the PS3. You need to install every game, and still have the disc in the system to play. I can guarantee that come November we are going to see the PS4 outperforming the Xbox One in load times since Sony has had a much longer time to perfect the solution.

  3. rbn

    June 24, 2013 at 11:21 am

    The reversal on disc-based games was the right move, but they really should have left those benefits in place with digital games. The problem with their initial stance was that they were effectively trying to force everyone to go along with their new model, and naturally when you try and take something away from people there is going to be push-back. As you say, the costs were easy for people to relate to, but the benefits were more theoretical (especially as they didn’t actually sit down with developers) and hard to interpret.

    If, however, you give people the choice then they might be more willing to test the waters. Once people start seeing solid benefits from it, and that they are getting something significant in exchange for the rights they are losing you can slowly turn them around to your thinking. Give people a choice, and make the new model attractive enough and you’ll eventually get people over to your side. Trying to just throw us all in the deep end and hoping that we’ll just suck it up is never a good way to do business.

  4. Justin Amirkhani

    June 24, 2013 at 12:24 pm

    The family sharing plan was a complete joke. It sounded like people got to let their entire families use their games, but it was merely a timed demo (something that should be available for free anyway if Microsoft’s doing an all-digital marketplace) and it still only let one person at a time use it (meaning that you couldn’t even play co-op with one copy of the game).

    The decision’s reversal is undoubtedly a good thing for players overall, but I still can’t get over the mandatory Kinect, the price-point, the fact I still need to pay for Multiplayer, Netflix, and all the other bullshit I shouldn’t have to pay extra for, and their generally hostile attitude to me as a consumer.

    The PS4 hasn’t won by default, but I’m positive Microsoft gave up their stake in the position.

  5. craigbamford

    July 3, 2013 at 1:03 pm

    The gizmodo piece was bizarre…so bizarre that it felt like some kind of elaborate troll. It was one of those situations that occasionally happens with tech writing where someone falls in love with what a device COULD do, and therefore avoids discussing or thinking about the things it actually DOES do.

    (Witness all the breathless writing about tablets, which are actually content-consumption devices in like 99% of use-cases. Great at that job! But that’s pretty much what they do.)

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