Were the Xbox One’s original policies correct?

by Tom Robinson 9 Comments 6 Likes 5,429 Views 23/06/2013 Back to Xbox One articles Xbox One

If you’ve been paying attention to gaming news recently, you would know that Microsoft did something almost unheard-of and did a complete back-flip on their ideas for their next console, the Xbox One. After vehemently stating to their consumers that everything was “set in stone” and nothing could really be changed, they changed their minds. Why did they do it? Why is Microsoft changing their minds one of the worse things that could have happened in gaming news this year?

When Microsoft announced the Xbox One in May the backlash from their event was immense. The outrage across the media was intense and brutal, and Microsoft’s mishandling of the public relations afterwards was humorous to some, but just made things worse for others. The PR team had conflicting information between itself, the Xbox Support Twitter was a disaster of differing information and miscommunication, and interviews for Microsoft figureheads just allowed Microsoft’s grave to be dug deeper and deeper.

So Microsoft did what they felt they had to. They caved. A few days ago, all the “horrible”, notorious policies (that were apparently set in stone) were removed - the innate DRM built into the console, the 24-hour check-in, the used-games restrictions... all of it was now gone. In its place was a simple one-time activation when you first setup your console, and you’re done, you’re free to play your console wherever you please.

The consumers felt cheated. Rightly so; after decades of being able to do whatever they pleased with their console games, suddenly Microsoft were telling them they couldn’t. Yet it is quite possible that Microsoft were right after all. The games industry is in a slump, and anyone can see that. Money is being bled out of the industry left and right. Digitisation as a whole is struggling to be accommodated among the customers, and that’s a very bad thing for publishers.

As it stands, there are quite a few middlemen between a publisher and a customer, each getting a slice of the money made from their product. This has always been the case. What makes this worse is the used-games market; developers aren’t seeing any money made from this area of the business, but instead it goes solely into the roughly-monopolised pockets of corporate games stores.

Capitalism is a harsh mistress for the games industry, because it is solely dependent on the ideals. But it’s not evil, as commonly believed; it simply needs to change. As it currently stands, the consumers are the ones who win; which, as a consumer, you would probably imagine that to be the best-case scenario. It isn’t. Currently, video games cost millions of dollars to produce, and are struggling (on the whole, there are obviously exceptions) to recoup those sunk costs.

There’s a need for a new business model. Everyone sees it. PC is already breaking into it, with the Steam platform (as well as its competitors). The retail model is inherently broken for the games industry, even though for the past 30 years it has been solely reliant on it. It needs to change, and that’s not feasible on a publisher-level; it has to be done on the platform. This is where Microsoft got it right, but got it completely wrong.

Microsoft saw that the industry was struggling – how could it not, it owns several developers struggling in the very market we’re talking about – and decided this would be the time to change it. They had the right idea; if you can deliver your product online, for a comparable price, you are eliminating the need for the middle-man. You are ensuring the money your customers are paying goes in a straight split between you and the one owning the platform.

If your game comes out on the Xbox Marketplace or the PSN store the day it comes in stores, the industry as a whole wins. Imagine being able to pre-load your game days before it releases, being able to download the large game file before you are even meant to be able to play it, and being able to play it as soon as it goes live. This is how Steam works. This is simply what Microsoft was intending to achieve.

Microsoft clearly believed in this future. They are investing millions of dollars into their online “cloud” infrastructure – the Windows Azure platform, the “300,000 Xbox Live servers”, and more - all around the world so customers anywhere would be able to live this Microsoft dream. It probably would have worked better, and worked brilliantly, but this is where they stumbled.

To be able to achieve this, you need several things, and one of them is security. Security is a pivotal issue in today’s cyber lifestyle. Microsoft’s main competitors, Sony, were themselves subject to one of the largest security breaches in modern history. This is where your first check comes in: the need for the 24-hour check-in. Ensure that your customers are valid customers, and you can deliver them a digital product hassle-free.

With this, you have all the other little nuances you need to ensure the protection of your profits: you lock the games to your customer’s accounts and they can do “whatever” they want with them on any Xbox they can sign into. They can download (and play) them anywhere. Which is why you cannot trade the games with your friends; why would you, when you’re the one paying for the game. You’re being provided with this whole new way of being able to play your games; why would you expect everything to be the same?

Microsoft’s Xbox One’s hate was compounded by the poor timing, both on their part and on external circumstances. Thanks to the NSA spying scandal in the USA, and Microsoft’s “revealed” part in it, having a camera and audio device that needs to be constantly plugged in was just bad luck on their part. People instantly assume the worst, and that is that they are funnelling all the data from all the bought Xbox One’s to the NSA’s servers. People shirked even further away from the console than they had before.

An important rule was forgotten by Microsoft: people, customers most of all, do not like change. Big change scares people, and that’s what hurt Microsoft the most. They suddenly decided that the world needed a PC-esque platform for console games, in a world that isn’t ready for it. Not only do customers not yet realise they want this, there isn’t the infrastructure in place for it yet. World-wide internet speeds in the west are rough, and data is expensive in the USA and Australia (excluding Europe because they’re good.) And then you introduce the need to download games that are potentially 40 gigabytes large, as well as the need to “constantly” be online? That’s harsh, and people will react accordingly.

Things like this need to be taken slowly. Microsoft clearly miscommunicated their intentions with the device; they jumped straight to the end goal and didn’t fully explain why it needed to be done. They simply revealed a console that appeared to be locked down and a kick in the groin to the “loyal customers” who had supported them for years. The blow could have been lessened, but with their PR department, it was a death wish and Microsoft knew they needed to change it before their business felt it.

The change that is now coming in the upcoming generation is definitely a step in the right direction, and it’s Sony doing it right. After their hubris was demolished by their consumers at the beginning of the PlayStation 3’s lifecycle, they have learned, as a business, to “listen” to what their customers want. On the PlayStation 4, it is possible for you to be able to download games on release day, as well as in parts – you can choose to download either the multiplayer or the single-player component first, and you can play after a certain amount has been already downloaded.

Being able to do this is huge for gamers. Digitisation is the obvious future, and while the need for disc-based media is still around, it will eventually become non-existent thanks to digital delivery services. It’s important for all businesses in the games industry, whether they’re AAA-publishers or the small, upcoming indie developer.

Developers and publishers will benefit from this methodology. As it stands, an indie developer is just one who doesn’t have a publisher like Activision or Bethesda backing their game. They are struggling to compete in a market that has more competition than can be handled and riddled with poor business models that drains money out of the industry. Microsoft’s and Sony’s changes, especially Sony’s option to allow companies to self-publish, will be huge for the industry. It’s the first step of many that need to be taken.

Microsoft jumped the gun. The future they wanted for us is not one we’re ready to accept yet. But it will come. If the PlayStation 4 and the Xbox One can solidify a new, uniform method for delivering games, that future will not be far off. But it’s not here yet, and they need to take it one step at a time.

What do you think of T-Rob's assessment of the Xbox One about-face, and do you agree that it might not necessarily have been the best thing for the industry?

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Were the Xbox One’s original policies correct? Comments

  • M@ndyz 244689 XP 23/06/2013
    See when it's written like that I kinda feel sadface and stupid I was angry about the policies in the first place. If they had of just come out and said we are making a console like steam with "steam like sales" etc then damn I would have been all over it. I like the sound of that.. I think they just didnt explain it well enough and websites kept putting fuel on the fire :(
  • iamtom 47144 XP 23/06/2013
    Yep. The majority of the blame, in my eyes, lies on the PR and the interviews that were made. Major Nelson's is a big one.
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  • Olly 32925 XP 23/06/2013
    Well i saw all the good in the policies.
    Media, PR issues and trolls weren't swaying me.
    I was and still am ready for this future, it's a shame they caved.
    Have to add this was a really good read, well written. (*)
  • ukpc 0 XP 24/06/2013
    You should also point out that the Xbox One also has day one digital downloads, and will also allow you to play your game as it is being installed.
  • NoPrincess 0 XP 24/06/2013
    While I hate the big retailers as much as the next guy, my concern about the used game issue is focused on local businesses that rely heavily on used game circulation. Their market wouldn't disappear, especially with the 360 still supported, but it would hurt them. I'm not going to use the word "like" here, but EA has a win-sort of win in the used game arena. You can buy the game used, but you have to purchase a code for certain parts (typically online play and special features). While its nobody's favorite idea, it solves a problem.
  • Tano 340733 XP 24/06/2013

    @NoPrincess said: While I hate the big retailers as much as the next guy, my concern about the used game issue is focused on local businesses that rely heavily on used game circulation. Their market wouldn't disappear, especially with the 360 still supported, but it would hurt them. I'm not going to use the word "like" here, but EA has a win-sort of win in the used game arena. You can buy the game used, but you have to purchase a code for certain parts (typically online play and special features). While its nobody's favorite idea, it solves a problem.



    I still fail to see though how the used games market is in any way Microsoft's issue.

    IMO the retailers hold the major players like Sony, MS to randsom, because they know they are the only major distributors of games from the publisher to the consumer. Which is kind of why we need a sound digital platform to at the very least entice people to download games, and understand the licensing and ownership requirements of the product.

    MS probably took three steps forward, four steps back, rather than one step forward. Not to say one step is in the industry's best interests, but as far as communication goes the consumer was lost as to what the drvie was behind the initial policies.
  • Axe99 237 XP 24/06/2013
    " Imagine being able to pre-load your game days before it releases, being able to download the large game file before you are even meant to be able to play it, and being able to play it as soon as it goes live. This is how Steam works. "

    You can also do this now on PSN (I did it with Borderlands 2 last year, and Sly Cooper: Thieves in Time this year, and there are plenty of other games that do it). Indeed, most of the 'innovations' MS are introducing for the XB1 are already in place this gen on their main competitor's machine. MS aren't leading the charge (Steam are doing that, followed by the PSN), they're flailing blindly trying to catch up but struggling hard.

    The trick to solving the used game issue isn't to create draconian DRM (the check in every 24 hours or you don't get to play is harsher than Steam by some margin) - it's to make digital more popular. Apparently 60% of Vita game sales are digital, so I'd wager used games are far less of a concern on the platform.

    As for the games industry being in a slump, used games have been huge for decades. They are not the cause of the slump, and reducing their impact won't be the cure (the cure will be going all digital, increasing ease of access, reducing distribution costs and creating a long tail for every game via regular sales a la Steam - which is also something happening regularly on PSN, and even XBL is _slowly_ starting to get some half-decent sales happening).

    Microsoft's approach was all wrong, and they were rightly punished for it. That they were directionless and had no vision is highlighted by them withdrawing their sharing scheme. If they really wanted to sell us on a digital future, why not a two-tier system? You can do it the old way (no DRM, no sharing) or you can opt-in to a digital only approach that includes the family sharing, use on any console and what-have you. Given they already had the infrastructure in place for this suggests that their goal was never the all-digital future, but rather control of customers and maximising the amount of money that could be squeezed from them. This is hardly surprising, given Microsoft's outstanding pedigree in this area.
  • Gryllis 344978 XP 24/06/2013
    They did a shithouse job of explaining anything and then an even worse job of correcting misconceptions.
  • Armige 6659 XP 24/06/2013
    Was going to get one anyway but i'm still glad they are changing them,
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