Microsoft looking to take a cut of used games with Xbox One [Report]

The platform holder may have a new system to monetize used games

Following the revelation of the Xbox One, Microsoft's stance one second-hand games has been muddled. Xbox Live director of programming Larry Hryb stated today that the Xbox One "is designed to support the trade in and resale of games," but the details of that support remain in the dark. Anonymous sources have told MCV that Microsoft is planning a cloud-based authentication system to handle used games at retail.

Upon purchase, new games will be registered to your Xbox Live account. If you trade in a game at a retail outlet that has agreed to Microsoft's terms, it will be wiped from your Live account. When that store sells the used title, Microsoft and the game's publisher will take a cut of that sale. The system will reportedly be based upon Microsoft's existing Azure cloud service.

Other sources have told Eurogamer that Microsoft and related publishers will take their cut out of a hidden activation fee. Microsoft would control the price of the activation fee, which would allow the company to control the price of used games.

"We know there is some confusion around used games on Xbox One and wanted to provide a bit of clarification on exactly what we've confirmed. While there have been many potential scenarios discussed, we have only confirmed that we designed Xbox One to enable our customers to trade in and resell games at retail. Beyond that, we have not confirmed any specific scenarios," a Microsoft spokesperson told MCV.

"Another piece of clarification around playing games at a friend's house -- should you choose to play your game at your friend's house, there is no fee to play that game while you are signed in to your profile."

In contrast, Polygon's sources said that no activation fee is present, but the system will need to be online for constant authentication checks. The system checks an encryption code included on the disc, tying that disc and code to the current active account on the Xbox One system. Playing the disc on a new system de-authenticates the game on the original account. Polygon's sources said that Microsoft has yet to decide the length of time between online code verification, but the company has looked into special exemption codes for those in extraordinary circumstances without internet, like active-duty military.

In the end, without full disclosure from Microsoft, we all remain in the dark on how Xbox One will deal with used games.

Related stories

Smite esports leagues will be exclusive to Microsoft's Mixer

Xbox streaming service to showcase both the Pro and Console series for Hi-Rez's fantasy MOBA

By James Batchelor

Microsoft: "Representation isn't just good common sense, it's good business sense"

At the DICE Summit today, Phil Spencer urged the industry to pursue diversity and inclusivity or risk missing out on the growth opportunities to come

By Matthew Handrahan

Latest comments (11)

Looking at the new giant cut of used games, it makes almost no sense to share used games/resell it back to the retailer or for the retailer to be in business to have used games really (for the XBOX system)
1Sign inorRegisterto rate and reply
Everything I read is another "win" point for the PS3, unless Sony really mess up.

Assuming the retail price of both PS4 and XBone are equal, stores will be able to offer higher trade-in values to PS4 games. Which means that gamers who do a lot of trading in, will lean towards PS4 titles - as will stores.

The way to avoid this is to make XBone titles cheaper at retail - which either means the retailer is making less ... or the publisher.

This mixing of retail into a "digital-only" ecosystem has turned this into a mess. If they want to ship titles on disc (because they are too large to download) - thats fine. But the discs should be free, or close to free. Provide a disc with every edition of the XBOX magazine, which has a copy of all the latest games on it. People install the game files they want, then purchase the game online.

Nintendo has a nice balance: a retail ecosystem, selling physical discs, which work as-is. And a digital ecosystem, bound to systems (so there is no need to be online to verify accounts before playing). No mixing of the two.

Lets see what Sony ends up with in the end.
1Sign inorRegisterto rate and reply
Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.4 years ago
It really does seem like MS is selling the PS4 for Sony.
2Sign inorRegisterto rate and reply
Show all comments (11)
Paul Jace Merchandiser 4 years ago
I have a feeling that Microsoft took the same route as Sony when making their next gen system and during the "ask the developers/publishers what they want" part the overwhelming majority probably asked for this measure. So while it sucks for us consumers Microsoft is giving the game makers exactly what they asked for, which I'm sure will lead to some sort of exclusive content/deals for the XB1. And I have no doubt that Sony has a similiar system in order, they just aren't ready to reveal it yet and will most likely wait until E3 or closer to launch. That way Microsoft takes the majority of the heat for it.
0Sign inorRegisterto rate and reply
Morville O'Driscoll Blogger & Critic 4 years ago
@ Paul

It also gives some interesting leverage for all concerned. Publishers can try and demand the same system with Sony, with the threat of XOne exclusives (or more likely timed exclusives) held over Sony's head. On the other hand, Sony can easily look like the consumer's friend by acquiescing to the publisher demands, but making it known (through anonymous-but-confirmable sources) that it's the publishers who are to blame.

Financially, the only real winners in all of this are the publishers, depending upon the specifics of the activation fee/whatever it actually is. Reputation-wise, Sony comes out nice-and-neat. And, currently, the only real loser is MS, since they have been so shockingly ill-prepared that they just come across as stupid and greedy.

Edited 2 times. Last edit by Morville O'Driscoll on 25th May 2013 5:47pm

0Sign inorRegisterto rate and reply
@Paul: Not sure I agree. This is a mess - again, a digital only system would be MUCH better for both MS and publishers in terms of profits.

Digital sales on the WiiU are booming (heck, even I'm starting to buy retail games digitally!) - yet pricepoints remain similar, if anything I'm paying slightly higher. Yet this money is only shared between Nintendo and the publisher (or in the case of Nintendo games, 100% of it is theirs). So in AU terms, this is going from them making around $20 for a sale to a retailer ... to $60 for a sale to the consumer.

On the XBone, retailers will be buying new games for between $20-$30, and selling for $50-$60 (say US). There is FAR more profit in bypassing the retailer completely, than there is in worrying about 2nd-hand sales.

Nintendo are also letting retailers sell "digital" titles for WiiU games, effectively selling one-off codes that replace the puchasing part on the WiiU store. I would guess that retailers would make around $10 per sale on these codes. There is no stock involved, no second hand sales - and its up to the customer to then download the game. This isn't that different to what MS proposes - just less messy.

Really, all I want to see MS allow is "disc" authentication - whoever has the original disc in the drive, can always play the game - without any form of online required. Then all the problems would be solved.
0Sign inorRegisterto rate and reply
Morville O'Driscoll Blogger & Critic 4 years ago
Really, all I want to see MS allow is "disc" authentication - whoever has the original disc in the drive, can always play the game - without any form of online required. Then all the problems would be solved.
The problem with this system is that it will be dreadfully easy for Scene groups to crack, and for piracy to continue on the One as it has on the 360. That isn't to say that online-activation-drm is perfect - it isn't - but it does mean that 0-Day piracy will be cut down quite a bit if the One DRM system is any good (for instance, as good as Steam's CEG DRM).

Edited 1 times. Last edit by Morville O'Driscoll on 25th May 2013 8:16pm

0Sign inorRegisterto rate and reply
Paul Jace Merchandiser 4 years ago
@Michael--Like I said, it sucks for us consumers. But Microsoft is most likely doing this to appease their developer/publishing partners. I'm sure there are better ways to go about it but it looks like this is the path they are taking with this one.

Edited 1 times. Last edit by Paul Jace on 26th May 2013 4:12am

0Sign inorRegisterto rate and reply
Was jumping into bed with EA worth it for MS in killing the Xbone?

The publishers and retailers now will share in a revenue squabble - while the players (viewers) are left in the shadows!

What a mess - MS, time to upscale the executive pool and rethink your approach.
0Sign inorRegisterto rate and reply
James Prendergast Research Chemist 4 years ago
@ Kevin - We* still don't know whether PS4 does something similar...

*Well, it's not been revealed yet so I don't know.
0Sign inorRegisterto rate and reply
Rick Lopez Illustrator, Graphic Designer 4 years ago
Ok... correct me if Im wrong... first the retailer gets a cut, then microsoft, then the publisher, and lastly the developer. Is it me or is the developer still getting the lower end of the straw here. I dont see how this changes anything. It just makes things harder for retailers having to need the elctronic system and connections te unlock the games and resell the, Sure retailers like gamestop and best buy might benefit, but what about smaller retailers and small video rental outlets that usually resell old movies. I dont see anything positive or attractive about all this.

Edited 1 times. Last edit by Rick Lopez on 28th May 2013 3:52pm

0Sign inorRegisterto rate and reply

Sign in to contribute

Need an account? Register now.