The Xbox One Question: Why Did Microsoft Do It?

Xbox One's DRM has given Microsoft its toughest ride at E3 in years - but the logic that led here is understandable, if mistaken

The dust is settling on E3 2013 and by now you have probably read countless opinions about why Microsoft is wrong and how it "lost" E3 - along with a few lonely stalwarts arguing to the contrary. With the benefit of a few days' hindsight on those explosive press conferences and a few tens of thousands of words of executive interviews to provide context, I've reached a slightly different set of questions. I'm less concerned with "is Microsoft doing the right thing" - it's an argument that pits "right for consumers" against "right for a very narrowly defined segment of the industry", and I know which side always wins those arguments in the end - and more intrigued by the question, "why is Microsoft doing this?"

"Nobody really believed that Microsoft would paint itself as a villain unless it was absolutely confident that Sony was going to be compelled to do likewise"

After all, we're talking about a set of strategic decisions which turned what should have been the celebratory unveiling of a new console into a focus for opprobrium and dislike from press and consumers alike - and which subsequently overshadowed a reasonably solid E3 conference by giving a rival firm the sort of clear competitive advantage that just hasn't existed in the console business for over a decade. Microsoft is not a company that hires stupid people. It remains one of the world's richest companies and its staff are, on the whole, extremely intelligent people - so while the Xbox One may face an uphill struggle to regain consumer trust and rival the PS4 come November, the decisions which led us to this point were presumably made by intelligent, rationally thinking people. Rather than simply heaping further criticism on Microsoft, a task rather like dropping pebbles on the Himalayas, I'd like to try to understand those decisions a little better.

One key point, I think, is that Sony's announcement that it was not pursuing an anti-resale or anti-sharing DRM strategy actually came as something of a surprise to many people. In the weeks between the Xbox One unveiling and E3, something of a consensus had developed that Sony must be planning a similar approach. Earlier statements confirming that the PS4 would play used games were reconsidered - after all, the Xbox One will play used games, it's just that there's half a page of caveats and footnotes accompanying that statement. Many commentators argued that Sony was simply doing a better job of dodging the question than Microsoft, while most of us simply hoped that whatever awful DRM system PS4 used, it would be less restrictive than Microsoft's approach.

The reason that this consensus developed was that nobody really believed that Microsoft would paint itself as a villain to this extent unless it was absolutely confident that Sony was going to be compelled to do likewise. Who would do the compelling? Publishers, presumably - publishers who, we figured, had been leaning on platform holders to "do something" about second-hand games for years. Microsoft had made an internal calculation that Sony, too, would be forced to adopt this sort of system - we all therefore assumed that Sony, facing the same kind of pressures as Microsoft, would end up presenting the same unpleasant cocktail in a slightly different glass.

"Most publishers have hastened to distance themselves from an online pass requirement, which is making Microsoft look rather isolated "

Well, they didn't. Sony's policies for boxed games on PS4 hasn't changed an iota from PS3 (or Vita, or PSP) - the games aren't locked to a console or an account and they're region free. Publishers can implement an "online pass" style system if they wish, but most publishers have hastened to distance themselves from that requirement, which is making Microsoft look rather isolated (though I don't believe for a single second the protestations of innocence from publishers claiming they never asked Microsoft to implement stricter policies for second-hand games). Whatever pressure the platform holders came under to implement this kind of strategy, only Microsoft blinked.

This could be an outright miscalculation on Microsoft's part - they could simply have failed to hold their nerve in the face of partners who threatened to withdraw software support from a console that didn't fight back against the "menace" of pre-owned sales (and sharing, and swapping, and lending, and all those other nice things humans quite enjoy doing with their friends and colleagues). That would be embarrassing - it would suggest that Sony's announcement about not beefing up its DRM came as a huge shock to Microsoft, and is probably causing some pretty angry scenes in Redmond meeting rooms right now.

However, I think there's a cultural difference at work here too. I suspect that within Microsoft's culture the notion of "restricted licensing, not outright ownership" is viewed as uncontroversial and mundane. I suspect that there are quite a few people at Microsoft wondering what all the fuss is about, and far more who are just waiting for the "vocal minority" to quiet down and go away, confident that the "silent majority" is perfectly comfortable with everything that Xbox One is doing. Many big companies end up being a bit of an echo chamber, reinforcing viewpoints through ongoing repetition rather than exposing them to healthy external challenge, and Microsoft is no different.

Those viewpoints are borne out of two mistaken assumptions. The first is that people are already familiar with the idea of licensing over ownership. This is an assumption that's not uncommon within parts of the games business and it arises from thinking in terms of technicalities, teasing apart arguments to find flaws in the surrounding logic rather than tackling the wider point or understanding the full perspective. This focus on technicalities to the exclusion of a broad understanding of a wider picture that includes complicating factors like sentiment and public opinion is a common flaw in the games business, as well as being easy to identify in other parts of the technology and entertainment businesses.

This is important, because technically, every piece of entertainment or software you have bought for years has been licensed, not purchased outright with no strings attached. Every game, every album, every movie - they all come with an end-user license agreement or some other form of terms and conditions, pages and pages of (mostly unenforceable) legal nonsense which outlines the idea that you haven't bought a product, you've licensed something for use in a very specific and restricted set of circumstances. The lawyer's perspective, the geek's perspective and, I suspect, Microsoft's perspective is that this is already the status quo, Xbox One is simply enforcing it and everyone apart from a few noisy people on the internet should be happy.

"Consumers fight back when an actual restriction is imposed, not when a sneaky piece of legalese implies a restriction that nobody attempts to enforce"

The problem is that that argument began with the words "because technically" - which usually signals an argument which will prove to be logically flawless yet utterly at a tangent to reality. The fact is that while lawyers and the denizens of company boardrooms have become accustomed to this idea of licensing over ownership, consumers absolutely have not - because so far, it has mostly just been legal jargon that their eyes skim past, without actually changing how they interact with someone. Sure, that CD says you can't have an unauthorised public performance, but it doesn't stop you playing it at a party. Yes, the DVD says you shouldn't copy it, but it can't actually prevent you ripping it to your laptop to watch on the train. Absolutely, that game says it's only for the use of one person and unauthorised resale is banned, but I can still physically take the disc out of the drive and give it to a friend or put it on eBay. The people who have grown accustomed to licensing restrictions are only those who seek to impose the restrictions; actual consumers have yet to feel the cold hand of these restrictions on their day to day behaviour.

That's why a strategy that was probably seen as simply "continuing the status quo" within Microsoft has provoked outrage from consumers who, yes, have "technically" been bound by these restrictions before, but have not actually had to contend with them for real. Arguing, as some have done, that consumers should have fought back before now, when these EULAs and licenses were first being introduced, is another "but technically..." argument - consumers fight back when an actual restriction is imposed, not when a sneaky piece of legalese implies a restriction that nobody attempts to enforce.

Of course, there's another reason Microsoft may have seen Xbox One as an uncontroversial device - because we already accept similar restrictions when we buy digital software from Steam, the App Store, Google Play and their ilk. You can't trade in your Steam games, so why are you so upset about the same restrictions being imposed to Xbox One?

Again, this is a conflict of "but technically..." versus real consumer sentiment. Yes, Steam applies these restrictions, but there are two key differences. Firstly, Steam applies them to digital products, not to physical products, and consumers have very different relationships with digital products (rightly or wrongly). Applying the same restrictions to physical products - to items which consumers feel that they physically own ("but technically!") and feel that, as with any physical item, they have a right to keep, to give away, to sell or otherwise to treat as any personal possession since time immemorial has been treated - feels deeply unpleasant and grasping.

Secondly, Steam - like any store on a PC or a Mac - is a choice. I can buy software from Steam, but if I don't like the terms I can also buy through many other routes. Steam is chosen by consumers because it's the most convenient and often most cost-effective way to get games - it competes with lots of other channels, physical and digital. The same applies to iTunes, which dominates the music market but is entirely optional - you could buy all the music you want through other channels if you liked. I buy a lot of books on Kindle, fully cognisant that this is more restrictive than buying paperbacks, but accepting those restrictions in return for good value and superb convenience.

"Sony will end up selling digital software subject to fairly strict restrictions - all without having had to pick an enormous fight and look utterly black-hearted"

Xbox One doesn't propose to let consumers make a choice (other than "not buying an Xbox One", a choice a rather large number of consumers seem to be making right now). It intends to apply the same restrictive DRM to physical and to digital goods, treating them as one and the same despite consumers' radically different relationship with them. Sony will apply strict DRM to digital purchases on PS4, just as it does on PS3 (and as Microsoft already does to digital purchases on Xbox 360), but consumers won't complain vociferously because they accept this - it's an option. If you choose to buy a digital game over a physical copy, you do so aware of the restrictions but feeling that they are outbalanced by the convenience or other factors. In extending those restrictions to physical products, Microsoft removes a choice that consumers have become very attached to.

So that's what I think Microsoft's reasoning was. I wonder if they blinked in a staring match with publishers in which Sony kept its cool - but either way, I think that the decision was informed by a culture in Microsoft which sees licensing restrictions as far less controversial than they are out in the real world. I think that's a mistake, one which created a stupid business decision but which was not, in itself, based on stupid decision making - rather on intelligent people making a perfectly rational decision within a climate that warped their perceptions and understanding of the market they're operating in. I suspect that those same intelligent people are today rather shocked by the backlash and while some will be seeking to justify their decision, the brightest and best will be thinking of the most effective ways to backpedal and limit or even reverse the damage.

The only aspect of the debacle that I find really crazy is this: this is a fight which Microsoft had no need to pick. As I mentioned, Sony will apply similar DRM to digital purchases, just like everyone else in every entertainment and software industry does. In the coming five years, more and more of the software published and purchased on PS4 will be digital software. The physical retail channel will remain, and it will keep the industry honest by providing a competitive pricing channel, but by and large, Sony will end up selling digital software subject to fairly strict restrictions - all without having had to pick an enormous fight and look like an utterly black-hearted villain for kicking the legs out from under physical, boxed games. Microsoft, too, will be mostly a digital business in five years. Was it really worth risking the company's image and its product's popularity with the core market, potentially undoing years of hard work at building up the Xbox business, just in order to hasten on that process by a few years? Was this not a fight that could have been won just by being a little more patient?

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Latest comments (52)

Dan Pearson Product Marketing Manager, Genvid8 years ago
I think there were likely a lot of very surprised faces at Redmond when Sony announced it wouldn't be following the same path. Essentially, they two platform holders were engaged in a classic Prisoner's Dilemma - if they both chose the unpopular option, they'd both see some benefit. If they both chose the option which consumers wanted more, nothing would change. As it is, Microsoft 'fessed up and Sony reaped the rewards.
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Even frogs like a choice of a scented warm heated bath or seasonally spiced, whereas the XBONe approach is akin to flinging frogs into scalding boiling waters, although Spock would be proud - it's a logical conclusion
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A poorly executed promotion, linked to a poorly thought-out business plan. Rounded off by a badly constructed product brand.

An inability to handle media, or steer a promotional event - coming across as supremely arrogant - "deal with it!:

Very well paid Redmond executives have placed a Billion Dollar corporation in a position it has not had to face since Vista.

Those same executives that were meant to also deliver the support of the consumer game publishing and development community.

MS investor will raise many questions of the board and their business ineptitude - before a restructuring is demanded!
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Show all comments (52)
Bruce Everiss Marketing Consultant 8 years ago
We have a simple moral and business problem.
Due to piracy and secondhand sales most consumers of games do not contribute to the development of those games.
The percentage not paying can reach the high 90s percent. It did for boxed PC games. The vast majority of people are happy to steal if there is no chance of getting caught.
Game console only took over from home computers because they functioned as an anti piracy dongle. So the consumers of games were forced to pay the developers of those games. But consoles get hacked and piracy takes over. It was endemic on the PSX, which did immense damage to the game development and publishing industries. Some people have short memories, but those were fraught days for the industry.
So all that Microsoft are trying to do is to get the consumer to pay fairly to the developer for the entertainment experienced. You would think that the industry would be cheering from the roof tops about that. Instead there seems to be a fanboy mentality of siding with those who seek to harm us.
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Nick McCrea Gentleman, Pocket Starship8 years ago
Brilliant article, spot on.

The whole thing shows that the Xbox division is suffering from the same cultural blindspots as the rest of the company. As someone else in another thread pointed out, MS has failed badly in every consumer product category it competes in outside of the core Windows / Office businesses. It appears that the anomaly of the Xbox / 360 is being corrected, and MS is reverting to ithe mean.

How the shareholders can watch Ballmer fail continually and do nothing is a mystery to me.
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Alfonso Sexto Lead Tester, Ubisoft Germany8 years ago

There is a world called "online gaming" that requires original games to play into. You forget that part (as usual)
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Morville O'Driscoll Blogger & Critic 8 years ago
@ Bruce

You seem to conflate piracy and second-hand sales there. Please don't do that. Gamers are entirely willing to pay for games, if the price asked meets the value that the consumer places on it. Asking 35 for a game that lasts 5 hours, with no multi-player aspect to counter the short single-player, is just asking for your game to be either pirated, or bought and sold repeatedly on the second-hand market once the gamer is done with it.

Edited 1 times. Last edit by Morville O'Driscoll on 14th June 2013 10:20am

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Eoin Moran Studying Bachelor of Engineering, University of Melbourne8 years ago
It's funny. If they just decreased the price of digital content to five dollars cheaper than retail, then I'm sure their market would quite happily move to digital content. Yet from what I've heard they didn't want to annoy the retailers that sell the console. Instead they've decided to annoy the people who actually BUY the console!!
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Tom Keresztes Programmer 8 years ago
Gamers are entirely willing to pay for games, if the price asked meets the value that the consumer places on it.
And then there is the piracy when the console or all or certain games are not available in a territory.
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Sandy Lobban Founder, Noise Me Up8 years ago
Both of these companies are preaching to a niche market these days. Outside of taking some of each others customers, I just cant see how either of them will get new customers in any great amount coming on board. In my opinion, its more likely that all of the content on cheaper channels like steam and iOS will crossover to the main screen. As the quality of entertainment increases elsewhere, the reason for purchasing one of these devices in favour of a device that can do more than games alone just gets less convincing.
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Klaus Preisinger Freelance Writing 8 years ago
Publishers are always greedy enough to envy the money Gamestop (and others) make on used games. At the same time they are too complacent to get off their behinds and implement a "digital Gamestop". Why is that? If a console requires to be always on, then at least do something with it.
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Alex Lemco Writer 8 years ago
If Microsoft wanted the Xbox One to adhere to the same licensing policies that PC gamers are already familiar with, it might have been prudent to state categorically that there will be a shift from hard copy products to digital products. These could still have been bought in stores on the high street or online (GAME sells download codes for consoles already and there's no reason Amazon couldn't adapt their store to offer the same service), thus including the retailers and keeping the market competitive.

What goaded a lot of gamers is this 'half measure' nonsense where they buy the disk, then put it into the console, the console does its online checking and validating to ensure the gamer isn't playing an already-owned copy, and a few bits and pieces of data are downloaded to lock down the publisher's precious licensing policies. It's a tedious process by which gamers are being made acutely aware that their hard copy product is no longer 'their' hard copy product.

Going entirely digital would have been fine, as it would likely have meant Xbox One game prices could have either dropped or maintained at current RRP, while satiating the publishers' desire to see the second hand market disappear. Flying the same course and continuing with boxed games as they stand would also have been fine - more costly to the publishers and, consequently, the consumers, but fine. Trying to do both is indicative of business minds who are stuck in the past.
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Bruce Everiss Marketing Consultant 8 years ago
@Alex Lemco

Spot on. The current rrp for boxed console games is far, far too high and has been the biggest thing holding back the industry. As a result all we have left are a few blockbusters. The diversity and innovation has gone.

Console games were originally expensive for two reasons, firstly because they were on cartridges which were costly to make, secondly because they were copy proof, so the manufacturer could get away with it. Once CD/DVD/Blueray came along the prices should have dropped radically. They didn't because of short term greed. But it has ended up costing us billions. Now games can be digitally distributed for near zero cost there should be another radical price drop. But the platform holders have their heads in the sand.

Consumers are now accustomed to consuming their games on other, non console, platforms. Platforms that don't charge $60 a pop. Platforms with rich and amazing diversity and innovation that just makes consoles look old fashioned and irrelevant.

It is obvious that there will have to be an immense shift in attitude and business model from the console manufacturers if the new consoles aren't going to fail abysmally. Vita and WiiU already have.

Edited 1 times. Last edit by Bruce Everiss on 14th June 2013 11:27am

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gi biz ;, 8 years ago
@Bruce: "We have a simple moral and business problem."
No, we have a quality and marketing problem. MS is never been anything about quality. Usability, but maybe not even too much. They are just trying to sell something people shouldn't normally want, but sit down and watch how they'll still manage to make more money than you would expect. It's the usual "we do it our own way 'cause we are MS" thing.
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Both consoles are suffering from their parents not being able to let go of the past. I assume MS and Sony both know that the world has changed, each are aware of how consumers pay and play their games now, but simply don't want to admit or bow to the pressure of the new platforms. Maybe the most dangerous mistake they could be making is assuming that gamers see the old/new platforms as distinctly and isolated as they themselves do. I'm a 20-year developer who gorges on high-end PC/console games and even I don't separate them in my mind so much - it's all just games, and some of them are digital downloads that cost me 69p. While I will still happily pay premium for amazing experiences that last 100+ hours, if they think that makes me just as happy to shell out 40 for FPS v.176 they are certifiable. What they seem to fail to see is that it's not even necessary for a gamer to make a conscious choice about graphics vs. convenience or any other rubbish - you simply find yourself playing a lot more games bought at 1.99 and that's it, instant lower sales on console.

I find it hard to imagine that Sony and MS didn't in their heart of hearts want to make a cheap machine that they can sell to all but just couldn't find the design (or the balls) to match their wishes. It's just too damn hard to let go of what they know. Still, I can't feckin wait for next gen. For all my over-analysis, I'm a bloody geek after all.
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Nicholas Lovell Founder, Gamesbrief8 years ago
The first comment about the Prisoner's Dilemma is spot on. Here's how I like to think it went down:

Kaz Hirai and Steve Ballmer sit in a room. Dark. Smoky. The men look each other in the eye. "It's agreed. We'll kill pre-owned. Both platforms. DRM to the max," grates Ballmer.
Hirai reaches for his glass. He swirls the liquid. Savours the peaty aroma of an Islay malt. Crosses his fingers. Takes a sip.

"Yes," he says.

In the Sony boardroom, Andrew House confronts Hirai. "I can't believe you're letting Microsoft get a march on us. You're *letting* them have their press conference first. We should be first. We need to get our message out to consumers."
Hirai reaches for his cup. He feels the warmth of the sake against his fingers. Takes a sip.

"Wait," he says.

Hirai sits in a hotel room in Los Angeles. On a 50" screen, he watches Don Mattrick on stage, presenting the restrictions for Xbox One. He reaches for a pot of tea. He pours the aromatic water into a china cup. Takes a sip.

"Gotcha," he says.


Edited 1 times. Last edit by Nicholas Lovell on 14th June 2013 12:46pm

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James Prendergast Process Specialist 8 years ago
@ Barry
each are aware of how consumers pay and play their games now

I'm not sure you do either. Clearly there is still a large market for console and physically distributed games that are not controlled by someone else and dressed up as a "service".

There's room for both digital and physical and I personally think there always will be. It's just that the vast majority of "digital-only" games are sold for a very low price so that consumers do not mind the loss of control. Stick those purchases at full price and you'll see what people really want and think.

@ Nicholas - Bravo! :D

Edited 1 times. Last edit by James Prendergast on 14th June 2013 1:16pm

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John Bye Lead Designer, Freejam8 years ago
Bruce - "So all that Microsoft are trying to do is to get the consumer to pay fairly to the developer for the entertainment experienced. You would think that the industry would be cheering from the roof tops about that. Instead there seems to be a fanboy mentality of siding with those who seek to harm us."
The problem is the ham fisted way they're doing it, and their terrible communication of what they're doing and why.

Take their second hand sales policy, for example. Microsoft are supporting big retailers like Gamestop and Game who bite the hand that feeds them by pushing second hand games over new copies at the till and giving most of their limited shelf space to second hand games at the expense of stocking a wider range of new titles. But it stops kids sharing games with their friends or people selling their old games at car boot sales or on eBay. You also won't be seeing used Xbox One games in independent game stores, smaller chains (will CEX be a "participating retailer", for example?), or in countries where Microsoft has no retail partner or hasn't officially released the console.

As for piracy, I could be wrong, but Sony, without resorting to draconian online DRM schemes, seems to have done a much better job of restricting piracy on PS3 than Microsoft has managed on Xbox 360, where piracy is rife, hacked consoles are so common that Microsoft regularly ban tens of thousands of users from Xbox Live and doesn't even make a dent in the black market, and most games show up on Bit Torrent before they arrive on store shelves.

Of course, as the article points out, all of this is going to be a moot point soon, which is why it's so frustrating that Microsoft have taken this unpopular and frankly unnecessary step. Even Nintendo are seeing large percentages of their software sales on 3DS and Wii U coming from their online store, and that percentage is only going to get bigger as people become more used to it and retail's grip on publishers and platform holders slips, allowing online discounting and sales of the kind seen on Steam for PC games, a market that retail has pretty much given up on.
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Hi @James,
Yep I believe what you do too, except the bit about me not knowing the difference, I like to imagine I do.
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Jade Law Senior concept artist, Reloaded Productions8 years ago
I dont have a problem with the way xbox one is handling its software as such.. microsoft are following a trend that works well for steam and makes sense for consumers who value download content and the convenience it brings. Trade ins dont exist on steam and people accept that.

Problem is for me the lack of backwards compatibility and the arrogance when stating why they werent supporting it.

Im all for buying a license to my game and not the game itself just like steam.. but I dont expect valve to release steam 2 anytime soon and tell me that it wont support my current steam library. Also I have to pay for the pleasure...
What works for PCs doesnt always work for games consoles, microsofts product seems a bit confused, who is it for?

Swapped one inconvenience for many many more
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Christopher Thigpen Lead Producer, Kiz Studios8 years ago
Trying to re-invent the wheel of console gaming. One that has been grandfathered in for over 35 years was a huge risk. It reeked of anti-consumerism and selfish greed. It is the absolute right of the consumer to do whatever they want with their product, after purchase. And that has always been the "birthright" of console ownership. You can buy, sell, trade, rent, and borrow the disc that you purchased.

Trying to navigate away from that will always seem like you are taking the power away from the consumer and putting it all in the hands of the corporations. The peasants (consumers) are revolting and jumping ship.

No matter who came up with this idea at Microsoft to completely slap the consumer in the face. The harm has been done. Those who have been very very loyal to microsoft (including myself), are going through the stages of grief.

"How dare they?" "Why would you do that?" "I hate you!"

For the first time, you are seeing this play out against microsoft. As a consumer, it is my right to do what I want with the physical disc. If microsoft wanted to dictate the market. Perhaps they should just do away with the disc....

Honestly though. The execs are so out of touch with modern gamers, no amount of analytics they breeze through on a once in a lifetime read, will ever deliver the understanding that comes from the mind's of the gaming hive.

Bottomline. microsoft has been abrasive and obtuse.

Their sales and shares will show this. And then the current execs will get their million dollar bonuses and be kicked to the curb.

and then the cycle continues....
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Phil Morris Audio Producer 8 years ago
Well either Microsoft are greedy wanting to make money each time the game is re-sold at retailers, or they are trying to flop massively in the face of the PS4 and aiming for a massive tax loss to exit the business?
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Aaron Brown BA Computer Science Student, Carnegie Mellon University8 years ago
The only aspect of the debacle that I find really crazy is this: this is a fight which Microsoft had no need to pick. As I mentioned, Sony will apply similar DRM to digital purchases, just like everyone else in every entertainment and software industry does. In the coming five years, more and more of the software published and purchased on PS4 will be digital software. The physical retail channel will remain, and it will keep the industry honest by providing a competitive pricing channel, but by and large, Sony will end up selling digital software subject to fairly strict restrictions - all without having had to pick an enormous fight and look like an utterly black-hearted villain for kicking the legs out from under physical, boxed games.
Digital is going to be huge this generation, but I still think Microsoft's decision was well thought out. It has the best interest and future sustainability of the industry at heart.
I wonder if they blinked in a staring match with publishers in which Sony kept its cool
Did Microsoft Blink? I think Sony hit the panic button...

Edited 1 times. Last edit by Aaron Brown on 14th June 2013 4:22pm

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Gary Lucero QA Analyst, Senior 8 years ago
Steam absolutely keeps me from selling my physical products. That copy of Fallout New Vegas can only be played on my Steam account, no other. I may have bought a box and disc but I lost them as soon as I began to play the game.
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Gary Lucero QA Analyst, Senior 8 years ago
One more point: I think most gamers, even those who spend more time on their 360 than their PS3, are looking for an excuse to not like Microsoft. I agree that MS should have found a better way to present the Xbox One, maybe not mention anything at all about the whole used game/always online thing. Add that to the developer documentation or something. But I don't think MS and Sony are that far apart. Sony presented things better, Microsoft faltered, but in the end either game console will do what we want it to do. Play games.

And as far as backward compatibility goes (Jade Law), it doesn't bother me. Would it be convenient to have it? Absolutely. Would it potentially raise the price of the system even more? It might. Do you remember how poorly Sony handled it on the PS3? A clean break is sometimes the best way to go.
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From a consumer point of view, ie personally, despite having been console wise first and foremost an Xbox man ever since it was released, followed up by the xbox360, which I then got a more modern 250gb with kinect a year and a bit ago, despite my original working just fine, in the next gen I shall be getting a PS4.

First Microsoft has decided to sell a peice of hardware then has the audacity to force people who buy it to use it the way microsoft wants them to, its not a piece of software, its a peice of hardware, any company stupid enough to do this deserves to fail in a big way, it doesn't matter whats good for microsoft, it matters what the consumer thinks is good for them.

Secondly Xbox360 became an entertainment centre because households that had one for gaming purposes began using it for other things, whilst we all like such features, they are nevertheless counted secondary to the gaming, especially when there are a wide variety of much cheaper devices for performing similar operations available from a variety of companies, many of the tv's have such systems built into them, microsoft should have focused only on gamers in their initial announcement, and if they provides any info at all about tv's capabilities it should have been at the end as a side note, instead in their announcement which sets the tone for how consumers will view their console, they ignored games for ages and droned on about stupid american sports deals, like anyone outside america cares, and tv and skype and other such dross, microsoft should have known for well if you can get the console into the home it will be used for more than just games, but in order to get the console into the home it will first have to be sold to gamers.

Also microsoft got the pricing wrong and markup in the UK is ridiculous, I simply am not prepared to pay it, you can feel the corporate greed just looking at the price comparisons, rip of UK will backfire for once, its not like the PS4 isn't more expensive then it should be either, but by a lesser degree, having a console with less impressive ram cost 70 pounds more is a stupid move on microsoft part, again foresight, maybe microsoft doesn't hire stupid employees but it sure as hell has a stupid board of directors doing the decisions, and every single one involved is clearly pretty thick, its like microsoft has clearly seen what it wants but rather then going about getting it without annoying consumers, they thought screw the consumer we'll just be obvious about it and everybody will lap it up anyhow.

E3 was to little to late, and all the always online and no used, not that Im ever usually offline or do I ever buy used but nevertheless I like that I can be both, and less choice = insult to customers, the average person may not be to bright, but there not so stupid they cant work out your selling them a machine but preventing people from doing what they want with it for your own benefit, which is why your going to have a real hard time, much like the Windows 8 debacle with microsoft trying to force people to do it there way only to have to backtrack later on because no ones interested in doing it their way, they made every windows 8 into a tablet os, but never actually sold any tablets to more than handful of people and screwed pc users over in the process, so most who upgraded ended up paying a $5 to a 3rd party company who re-adds the start menu for em, microsoft is setting itself up for a big fail, right off the bat, by another decision in a similar vain, everyone can see it but microsoft who, dont have the good sense to ever admit when they're heading in the wrong direction until they're already neck deep in the pit.

So for the first time in 11 years the primary console and 1st I shall be buying on day 1 and playing games with will be sonys there are more games, its cheaper, its capabilities are similar if not better with GDDR5 vs DDR3 to consider, and it was marketed to the gamer in me, ironically with less then 10 games since bought the ps3 i bought later on I have only ever used as a blu-ray player, but the ps4 will be both a new shiner blu-ray player, and a console with games worth playing, If I get the xbox one which I probably eventually might, for the exclusives, it will be once the price is sub 300, its not like the games are going anywhere, and it will eventually hit the price I want so why not simply wait, plenty to do in the mean time.

Microsoft are doing everything wrong Sony did last generation that provided MS with such a big in, and more, so yes they're not to bright at the end of the day, for its not logical to emulate a competitors failure inducing policies, add some more detractors for good measure and expect a different outcome, just because they would like it to be so.

Edited 1 times. Last edit by Alexander McConnell on 14th June 2013 4:59pm

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Craig Page El Presidente, Awesome Enterprises8 years ago
Microsoft might not hire stupid people, but they definitely promote the ones they already have.

How else would you explain XboxOne, Windows 8, Windows Phone, and their tablets?
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Incompetence, Arrogance and Complacency all float!
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Clive Gorman Product Marketing Manager 8 years ago
An engineer leaked what a lot of people were thinking. Xbox wants to be Steam for console and they have to break some eggs to make the omelette now to be successful in the future:
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A very well thought out and cogent article. Thanks!
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Kevin Patterson musician 8 years ago
Great article :)
Very well written and wonderful to read, and I agree with every word.
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James Berg Games User Researcher 8 years ago
Rob, just wanted to say this is one of the better pieces of op-ed journalism I've seen, here or elsewhere.
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Aric Norine Animation, Next Level Games8 years ago
@Michele Quality and Marketing are business problems. @Bruce's point stands.
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Andy Payne Chair/founder, AppyNation8 years ago
As usual Rob hits many nails on the head.
Here's what I think....
Actually I can't be bothered to write what I think
Fireproof Barry is right
Peace and Love
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Greg Wilcox Creator, Destroy All Fanboys! 8 years ago
Maybe Microsoft didn't do it at all. It was Mr. Yoshida, in the boardroom with the lead pipe...
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David Serrano Freelancer 8 years ago
But there's larger problem here which isn't being addressed. Which is, while consumers may not have legally owned the games they've purchased in the past... they reasonably believed they did. This in turn, directly influenced the perceived value of the games and the consoles. So virtually all of the growth the core game industry has experienced over the past two decades has been based on asymmetric information and adverse selections.

So Microsoft's miscalculation was the belief that consumers would place the same value on a restrictive usage license as they did on what they believed were sales transactions which transferred legal ownership of the products from the developers or publishers to the consumers. Sony on the other hand, correctly decided it was in everyone's best interests to maintain the pretense of a transfer of ownership.

But this can't be maintained indefinitely, it's a temporary fix at best. Like it or not, the game industry must work to find a more fair and realistic balance between where IP and copyright claims should end and the consumer's first sale doctrine rights should begin. Because the reaction to Microsoft's plan has proven when consumers understand the actual terms and conditions, it radically alters the perceived value of the product. And if the perceived value of games drops from $60 to $10 or $20, a multi-billion dollar industry will be transformed into a multimillion dollar industry. Or into extinction.
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Greg Wilcox Creator, Destroy All Fanboys! 8 years ago
@David. Had the industry done this back in the 1990's, it would have been a better thing for developers and publishers today. But doing it now in such a ridiculous manner:

Spend a year or two setting up the "USED GAMES ARE EVIL!" tee (and teeing off gamers with that noise that they might be pirates/lazy/cheap/otherwise unwilling to see the "light")
Adding more DLC, per-retailer bonuses (bleh to retailers if they're responsible for this practice) and other payment schemes to prolong product life and wallet draining ("popular" ideas aren't always "good" ideas)
Keep hitting balls at people for buying used while making new games smaller and smaller in content (ONE fighter in a fighting game? What is this, Karate Champ?)
Cook up more plans to make physical model go away without regard to the "small" (but bigger than thought and denigrated as a "vocal minority") user base who still relies on media and buys no DLC
(fast forward a bit)...
Create consoles that allow for LIMITED to no physical media usage despite millions liking what they have/no reliable means to get digital only large download content and so forth and so on...

Yeah, not a good thing.

Look, it's a given that physical games are probably on the way out and yes indeed, the Xbox One offers up SOME good ideas that make sense (although gawd help anyone who buys one thinking it's a forever system as once the next gen idea rolls around of a new straight to TV content-only service with no box, there goes game history for that part of Microsoft).

But among other things in that license (which is evolving like milk going to yogurt to cheese to really rotten cheese) telling people the Xbox 360 is THE solution to not being able to get an Xbox One even if money is no issue is just asking for both barrels on the street where it seems Microsoft never sets foot on...

I don't think they'll change anything (and why should they, if they've mapped out the IDEAL consumer for that new console), but they will sit and wait and let the numbers roll in, hoping those of use who aren't on board will "wise up" and see what they're offering is THE future in their digital world.

That's not going to happen in the masses seen last generation if the world slides into some more conflicts and issues it needs to set right. But then again, that real world stuff also will keep any other console from doing as well it it would under less insane circumstances...
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Curt Sampson Sofware Developer 8 years ago
If there were negotiations with publishers, one reason that MS might have blinked and Sony didn't is that MS has always seemed to value exclusives quite highly, to the point where for smaller games they'd rather not have it on the platform at all if they can't have an exclusive. That probably gives publishers a little more leverage over MS than they get over Sony.

As for the backward compatibility, Jade, what all you non-technical people don't get is what you're really asking for. For technical reasons, your choices are a console that costs $100-150 more than it would otherwise, a console significantly less powerful than the competition, or no backward compatibility. Sony went the first way (for a while) with the PS3, and Nintendo the second with the Wii U. Do either of those make any sense at all for Microsoft? No, only the last one does, especially given that the majority of the market for backwards compatibility already have an Xbox 360. Sure, it's less convenient, but if given the choice, how many would really pay an extra $150 for it? Would you?
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Morgan King Animator 8 years ago
If Microsoft hit the stage selling the XBO as a future-defining all-digital cloud-based broad content hub of revolutionary dynamic online content they would have walked away as the incontrovertible next-hot-tech-device champion compared to Sony's business-as-usual- hardware upgrade. Instead, the suits at MS came up with a physical-media-spoiling consumer-rights-ignoring police-state-endorsing corporate-advertising embracing-dead-media guns-and-footballs trainwreck while Sony got to hop into the hall of heroes simply by doing nothing risky at all. Even if the XBO experience is utterly amazing, the messaging incompetence at Microsoft has been utterly flabbergasting.
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I still have a massive old chunk of a 15 yr old Sony TB with no HDMI. It still plays games and sky cable v well. Why would XBO think people upgrade TVs like underwear and ditch physical discs altogether. Perhaps there is something to what Miyamoto said, there is a nostalgia and importance in owning a piece of hardware/game that you can take out 10-15 years down the line, which may not persist on a digital wallet that may disappear when services get upgraded/changed in the near future.
This is ONE agenda that is not the zeitgeist.
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Mike Becker Translation Project Coordinator, Pole To Win Europe8 years ago
Would people have accepted Steam if they were forced to allow Steam to search hard drives once a day?
I don't think so.

Plus, if MS announce Xbox One games will cost as much as Steam titles, everyone would accept it.
But right now, customers' rights are taken away (pretty unnecessarily), and we get absolutely nothing in return. True, it has been happening for years, and for whatever reason, most of us have accepted pre-order DLC, DLC in general, online passes etc.
Finally, it seems an important line has been crossed and we start realising what's been going on.

Thank you for the wake-up call, Microsoft!
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Ga Media and Technology 8 years ago
ExBox (D)one! Sony released the hardware and software aand content that gamers want.Givng gamers controll over their purchases, allowing sharing and trade ins. On top of that they pushed indie development to the nexy level by giving them a more flexible platform. They made a more powerful machine, capable of also cloud and streaming services and they will if and as when physical media goes, they will give it to people. Plus They nailed it on Price point.
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Rafa Ferrer Localisation Manager, Red Comet Media8 years ago
Givng gamers controll over their purchases
I'm reading lots of messianic comments about Sony and I just want to point out that Sony didn't give anything to anyone or actually DID anything at all for that matter. They just kept the status quo. They could just let all their PR people go on vacation and let MS do the job for them. Biggest news about PS4 can't be explained without mentioning XBO and Microsoft's actions, and I can't help feeling there's something wrong to that. Although I'll end up having both systems and will probably love them both, I think where MS has acted really dumb and arrogant, Sony has acted kind of cowardly. But maybe that's just me.
I'm convinced that MS's approach reflects the way things will be in the future (sadly or not, your choice), but it was too soon to force it upon consumers like a cold shower, disregarding foreplay before, you know, screwing everybody.
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Ruben Monteiro Engineer 8 years ago
Lots of people who should be intelligent given their position make dumb ass mistakes all the time. Just look at EU's leaders.
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Nick Parker Consultant 8 years ago
There's a long way to go before launch with time for some U turns but not all as they're in the box already. If these U turns come, however, the damage may have already been done for the short term but further down the line, I have a feeling that the games will speak for themselves and we may have all forgotten this year's headlines.
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David Serrano Freelancer 8 years ago
@Greg Wilcox

"Had the industry done this back in the 1990's, it would have been a better thing for developers and publishers today."

If core developers and publishers had clearly communicated the terms and conditions of their EULA's from the start, this would be a non-issue today. However, a strong argument can be made if they had... most of the growth the core market experienced in the 90's and early 00's probably never occurs. And if the market had only grown half as large by the end of the 90's, would Microsoft still have entered the console market in 2001? So yes, thing would be certainly be easier today if the core game industry had always acknowledged its responsibility to determine how "a person not trained in the law" will reasonably interpret the language used in the terms and conditions of a transaction or contract. But if they'd unambiguously informed consumers paying the retail price for a game only granted them a limited usage license, the landscape of the core market would look radically different then it looks today.

And not to be a doomsayer but I can't help but wonder if the combination of six years of declining AAA sales (and consumer confidence in the market), the need to rebuild the installed base, and Microsoft and segments of the development community's plan to enforce EULA's will trigger a perfect storm in the core market shortly after the PS4 and XBO are released?

Edited 1 times. Last edit by David Serrano on 15th June 2013 3:26pm

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Neil Sorens Creative Director, Zen Studios8 years ago
"it's an argument that pits 'right for consumers' against 'right for a very narrowly defined segment of the industry'"

This is just plain wrong. For certain consumers, gamers who traffic heavily in used games and who view their games as possessions rather than experiences, offline gamers, etc. sure, it's not better than the status quo.

But for consumers who only buy new games and thus are in effect subsidizing used games for others, those who have reliable internet, and those who only care about the experiences that games provide and not ownership of a physical object, it unlocks some neat possibilities, including an ecosystem where games don't have to get stupid (tacked on multiplayer, heavy DLCification, free to play, etc.) to compensate for used games. Such an ecosystem could theoretically make games drop in price faster and allow a wider variety of games to thrive, like on many other digital-only platforms (Steam, for example).

Instead, the system that does nothing to change the status quo of dead mid-tier and monolithic AAA multiplayer shooters/sports is praised for giving customers what they want. Or what they think they want, anyway.

It may well be that the retail-tier game ecosystem on Xbox One will turn out to be just as tired and homogeneous as that of its competition and predecessor. In that case, consoles are going to continue to become a niche product as PC erodes it from the high end and mobile from the low end. But at least the Xbox One is going down swinging instead of continuing consoles' slide into irrelevance without a fight.

Edited 2 times. Last edit by Neil Sorens on 17th June 2013 11:30pm

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Bostjan Troha CEO, Zootfly8 years ago
Bruce, your sentiment that
You would think that the industry would be cheering from the roof tops about that. Instead there seems to be a fanboy mentality of siding with those who seek to harm us.
is exactly what this article is all about. Technically...
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Nick McCrea Gentleman, Pocket Starship8 years ago
Totally agree with Neil Sorens. The real tragedy of Microsoft's bungled reveal here is that it has managed to line up consumers + specialist press alike against a change which could *in theory* be a major force for good.

The real problem with the whole piracy / DRM / second-hand issue is that it has led developers, in many cases, to fundamentally alter game *design* - and not in a good way. DLC obsession, online passes, multi-player focus to the detriment of immersive, single player experiences.

I'd support any system which could just take these kinds of considerations off the table, and leave developers do what they need to do for the benefit of the game, without having to worry about the second-hand ramifications of whatever design decisions they took.

Edited 1 times. Last edit by Nick McCrea on 17th June 2013 1:34pm

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David Serrano Freelancer 8 years ago
@Christopher Thigpen

Ultimately, this is a problem of industry leadership choosing what they perceive as the path of least resistance. And they believe further monetizing a shrinking audience is the solution to their problems. What they fail to understand (or refuse to acknowledge) is this is a no win scenario. Because drawing more water from a well that's running dry may satisfy short term needs, but it will only hasten the inevitable.

For the core game industry to remain viable into the future, it must start to bringing millions of consumers from all demographic groups into the market. And this cannot happen until the nature, shape and form of the games fundamentally and radically change. Because those consumers have already been exposed to and rejected core games as a form of play, and as a primary source of entertainment.

So developers, publishers and console manufacturers must understand going forward that minor alterations to existing business and development models will represent a bigger risk than developing new types of games which won't conform to what the development or marketing community defines as a "real game."
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Aaron Brown BA Computer Science Student, Carnegie Mellon University8 years ago
@David Serrano
For the core game industry to remain viable into the future, it must start to bringing millions of consumers from all demographic groups into the market. And this cannot happen until the nature, shape and form of the games fundamentally and radically change
Your point about drawing water from a drying well is a good one because it applied to both Microsoft and Sony.

However, you have to understand that the only way that developers will take more creative risks on consoles is if minor alterations to existing business and development models, like the ones that Microsoft is spearheading, become commonplace in the console industry.

Single player games are often the most creative experiences that developers create. These games are thriving on the PC, steam especially, because the DRM practices are stables of the ecosystem. Console game developers will not take risks until they see the opportunity for reward.

Its kind of a paradox.
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Alfonso Sexto Lead Tester, Ubisoft Germany8 years ago
That is not true. I live in Germany and we have a good number of games (thankfully, each day less and less) that are not released or censored. We just import from Austria or from UK (Those of us who can't speak German) and problem solved.

But even so. In that case we could have a pretty long debate regarding if it is piracy or not if I get an illegal copy of a game that, for not being released in my territory, technically is not causing a sale loss to the company who made it.
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