Netizens Kill the Future of Gaming

How the internet mob and Sony Microsoft PR destroyed a good vision of the future

This week Microsoft announced that it was rolling-back its policies with regard to always on, and Digital Rights Management (DRM) for Xbox One games. Many may call this a win for gamers, and that DRM is something, from the outset, Microsoft should have never considered with this particular audience. To the contrary, I believe this rollback only considers the least common denominator and represents a significant loss for console gaming, most gamers, and the industry as a whole

What Exactly is Always On?

Let’s first revisit the original issue that sparked heated outcry by gamers, and the eventual fold on this plan by Microsoft. The Xbox One was originally to require an intermittent internet connection, and enforce a new DRM standard. If we dive into the details of what this was to mean, then we can discern Microsoft's reasons for proposing this policy, and determine what were the inherent benefits and drawbacks of what they were planning. The components of Microsoft's Always On strategy featured:

  • A persistent connection to the internet, even when powered down (in standby)
  • 24-hour Check-in validation of game licenses
  • New rules and processes for lending and selling games: game sales or giveaways between two non-retailers required the recipient to be on the owner's friends list for a prior 30 days; and presumably would require some type of license transfer by the owner. Microsoft had not yet detailed the process for lending games, but we can make the assumption that it could be a similar process.
  • Potential publisher-enforced retail fees for used games; which would be enforced upon the retailer (e.g. GameStop).

Drawbacks of a Flawed Strategy…According to the Internet

Based on this proposed strategy there are some fairly obvious drawbacks, and perhaps some not so obvious benefits. Let's take a look at the fears and potential downsides first. These were the arguments against this policy that were heard the most frequently on forums across the intertubes. They included:

  • Inability to play games without an internet connection
  • No ability to buy or sell used games
  • Added Complexity for lending, selling or giving-away Games
  • Potential for higher priced used games due to publisher fees

The second item was patently false, but the truth is much crazier. It is my opinion that, for most gamers, the most (and really only) significant issue here is the ridiculously convoluted process for lending, selling, or giving your disk-based games to a friend. There is really no defense for placing this much burden onto consumers. Under this policy, there effectively is no game lending, because the process is so confusing that most people would never figure it out. Selling your games back to GameStop would have been less confusing because they presumably would take care of all the transfers on their end.

The potential for additional fees at retail for used games seems like a moot point, because we've already been through that with publisher tools like the EA and Ubisoft online pass implementations. This sounded like an extension of that, but the cost is paid by retailers, and presumably passed on to the consumer. Ultimately I don't really see this as a bad thing, for reasons that I will get into in the next section.

The big taboo of Microsoft's previous policy was the requirement that the console have an internet connection. Part of the reason for this was to enforce a DRM policy. In the tech space, those are three little letters that are packed with emotion. People hate DRM. Paul Thurrott ( referred to the policy as Draconian. The internet mob got it's pitchforks, torches and rope and took to the forums to proclaim, "hell no!" Here's the thing: as a concept, DRM is not inherently bad. In fact it can be a good thing. It can help ensure that the people who are responsible for a product, reap the financial benefits of its sale, so hopefully they will be able to continue making more products that you enjoy. The problem with DRM has always been in its execution. Game lending aside, - which was totally fixable without a wholesale reversal of policy - Microsoft's DRM policy was consistent with other modern services that have been birthed since the original xbox 360 launched.

no internet? buy an xbox 360.

Not to channel Microsoft's terrible xbox leadership, but it's 2013, and we now live in a pretty connected world. Those who would buy a $400-$500 game console, and not have an internet connection available to them, I believe are in the extreme minority. For a license verification system you would need less than 2 minutes of consistent connectivity per day to send a lightweight query (presumably, less than 1mb) to Microsoft's Azure servers. Of course there are some dedicated gamers who simply can't get an internet connection of any sort: sorry nuclear submarine guy, and soldier stationed in Afghanistan. It's not that I don't value your service, but you would definitely fall in the category of a special circumstance; and you can't expect Microsoft to shape all of their products to address a very small minority (the needs of the many…or something) I would bet that you don't get your netflix DVDs delivered either; and let's not mention streaming movies.

But Wait, There waa Good Stuff Too

If there's one thing the internet is good for, it's overreacting. And if there's one thing Microsoft is good for, it's coming up with the wrong response. By far the biggest problem with Microsoft's previous Xbox One policies are that they didn't effectively convey the proposed benefits to consumers. As a result, outrage ensued. If a company is going to impose what is perceived to be new restrictions on a product or service, then they must either have an insurmountable market advantage (e.g. the original iPhone iterations, before Android took root), or they need to convince customers that those restrictions are a desirable tradeoff. Microsoft failed miserably at this. So, what are those supposed good things that make the always on stuff worth it? Let's find out:

  • Diskless play for games purchased at retail

I own a rather large collection of games. The ability to get into any game I want without having to hunt for disks is a very nice-to-have.

  • Instant game switching

...improving on an activity that gamers do every day.

This is where things go from nice-to-have to where I never want to be without it. One of the more significant changes we've seen with consumer tech products over the last few years is a renewed focus on the UI and UX. On current consoles, if you are playing a game (let’s say Madden), and you want to accept someone's request to play a different game (say COD) the process of doing that is janky and long. Here's how the current and proposed processes breakdown:

Xbox 360 Xbox One
  1. Accept the invite
  2. stop your current game
  3. Take out the disk
  4. find the other game disk
  5. pop the disk in
  6. Wait for the game to load (my god, the title screen intros!)
  7. Wait for the match to connect
  8. Happy hunting :-)
  1. Accept the invite (continue playing current game until other game loads, and match connects)
  2. (new game starts) Happy Hunting :-)

You can clearly see that Microsoft was thinking about your game experience, and improving on an activity that gamers do every day.

  • Roaming access to entire game library from another console. (according to MS)

I'm not too sure how this would work, but I assume this would require a large, multi-hour download. Again, it's nice to have for those times when I'm visiting relatives…who also have the console.

  • Unattended System and game updates

It is unclear if this will still be a feature under the new policy. Since some connected services, and the server resources for them, have been abandoned, It's possible that some of these other services may once again become active, rather than passive updates. I can't tell you how annoying it is to want to jump into a game, but first having to get kicked out of my party so that the game can update. Or worse, having to do a complete reboot for a system update where I don't even know what was updated. I just want all of that to be taken care of without having to inconvenience me.

  • Additional off-loading of game components to cloud services (yes, this IS possible)

A few of the first-party Microsoft properties and exclusives stated how they are using some cloud servers to offload and enhance the gaming experience (e.g. Forza, Dead Rising, Titanfall). The danger with no longer guaranteeing that every xbox is online, is that it discourages developers from taking advantage of these new abilities, because they have to be concerned with the offliners.

  • Development houses get paid for used games

Here's a big one. In the world of console gaming, there are two eras: Before GameStop, and After GameStop. Make no mistake, used games is an incredibly large and vibrant market. It turned one used game chain into an enterprise that did $3.56 billion in sales during Q4 2012. While the sell all things gaming, used game sales is a large part of GameStop's revenue stream; and a part that returns no money to game developers. Since GameSpot began selling used games, studios have been seeing even tighter margins; with increasingly more importance given to those first two launch weeks, before used games begin circulating.

GameStop curbs investment in new IP

In 2006, Forbes ran an article where they attempted to breakdown the cost of an average xbox 360 game ($60). They found that for new games, retailers like GameStop received around $12 per game sold, before expenses. When a customer returns a week or two after release to trade-in The Last of Us (PS3), they will receive $26 cash - I called to check. That game will go back on the shelf for $54.99. that's a $29 profit with only the cost of disk envelops and labels as overhead. By contrast, the studios that make up the artists and developers earn around $27 per new game sold, but get nothing on used games. In fact, after the first few weeks there is a distinct drop-off in sales; one that's gotten more harsh with the proliferation of used games.

The bottom line is that game development houses need to see more return on their investment, if they are going to make the games you will come to love. Publishers and studios become more risk adverse as margins on games narrow. Quirky and niche games are increasingly being relegated to the low-budget, mobile and indie arena. New IPs that actually get released are usually a rare breed, as studios pump out their 6th Assassin's Creed in 3 years, or milk the heck out of another licensed superhero game. Imagine retailers could deal in used iOS apps that pay nothing to the devs. In that instance, the store would still be trying to break through the 250,000 app barrier.

Didn’t We Almost Have it All?

It didn't have to be like this, man! There were very sensible adjustments that Microsoft could have made to their DRM and online policy, like extending the check-in time to 72 hours, and simplifying the trade/lend process to take the onus off the user. The problem was that the topic became poison. While Sony trumpeted the mediocrity of the status quo (console and services-wise; not games), and Microsoft's PR pointed a loaded shotgun at its own foot, a lot a potentially great innovations got flushed down the toilet; throwing the baby out with the bathwater - to borrow a phrase from the old-timers. I guess we'll have to settle, once again, for slightly shinier helmets and more detailed blades of grass, instead of truly pushing the entire gaming experience into the next generation.


(Darn you lazy internet reading populous, and your short attention span…)

Many call Microsoft rescinding its online policies a win for gamers, but I believe this rollback only considers the least common denominator and represents a significant loss for console gaming, most gamers, and the industry as a whole.

Components of Always On

  • Persistent connection to the internet, even when powered down (in standby)
  • 24-hour Check-in validation of game licenses
  • New rules and process for lending and giving-away games
  • Potential publisher-enforced retail fees for used games

Potential Drawbacks of Always On

  • Inability to play games without intermittent internet connection to server (a few minutes of connectivity every 24 hours)
  • Added Complexity for Lending or Giving-away Games - a stupid process, but one that was very fixable if given a chance.
  • Potential for higher priced used games due to publisher fees - Not really sure about this one, since publishers have workarounds for this with online passes

Benefits of Always On

  • Diskless play for games purchased at retail
  • Instant game switching for faster, more convenient transition between game sessions
  • Roaming access to entire game library from another console - a nice-to-have
  • Unattended System and game updates - stop making me waste time approving every game and system update, when my only real option is "yes". Be more Apple-like.
  • Additional off-loading of game components to cloud services (yes, this is possible, and being implemented by developers of some games shown at E3)
  • Development houses get paid for used games - yes, devs need to get paid if we want to see more risky and niche ventures. Otherwise it's return of the sequel…part 7


I guess we'll have to settle, once again, for slightly shinier helmets and more detailed blades of grass, instead of truly pushing the entire gaming experience into the next generation.