X-Box One; The Second-Hand Rule?

Because answering the question is so damned hard…

The X-Box One Reveal was quite easy to follow. Lacking in games, but clear that they were looking to change everything.

Including, it turns out, second-hand sales. Now, massive credit to the likes of EDGE and Eurogamer who called this happening in February; a company as big as Microsoft is looking to change the very nature of second-hand and used games by ensuring that if you aren’t on the “permissions” list, then you will have to pay to unlock the disc and play the game.

That sounds simple enough. Until you get to a company trying to wriggle their way out of the potential consumer can-of-worms that is created by effectively taking away one of the most fundamental parts of enjoying video games in the last thirty years; sharing. You see, for every GameStop and GAME, there are two mates living down the road from each other who swap games every so often. This is perfectly normal and it’s obviously something many of us take for granted, so Phil Harrison decided to clear it up for Eurogamer.

“So, think about how you use a disc that you own of an Xbox 360 game. If I buy the disc from a store, I use that disc in my machine, I can give that disc to my son and he can play it on his 360 in his room. We both can’t play at the same time, but the disc is the key to playing. I can go round to your house and give you that disc and you can play on that game as well.

Okay. So he understands that it’s sometimes not even friends; sometimes it’s having two X-Box’s in the same property. Sharing the disc in a single household is expected. But it’s true, the disc is required for playing so if the teenage boy is playing FIFA ’12 in his room, his dad can’t play it on the machine downstairs. Right, we understand that bit.

Then he continues.

“What we’re doing with the digital permissions that we have for Xbox One is no different to that. If I am playing on that disc, which is installed to the hard drive on my Xbox One, everybody in my household who has permission to use my Xbox One can use that piece of content. [So] I can give that piece of content to my son and he can play it on the same system.”

This is where he misses the point by a country mile.

He says in the second bit that everyone can use that content, but on the same system. This means that he has completely missed the concept of the second machine in the kids room, and that the content is tied to and locked to one machine. If it ends up on a second machine, it transpires, the first installation of the content will be locked down until the disc is back on the first machine. Harrison says it is no different, but we’re talking a hugely different way of thinking. One console, one unit. He ignores the possibility that down the line, the system will likely end up in a kids room – probably not at launch, with a rumoured price of $499.99 – and then their whole digital plan could end up perilously over-complicated.

Of course, Phil Harrison was busy. Talking to Kotaku on the subject of fees, when asked if the second-hand owner would pay the same price for a game second hand as retail, he said;

“Let’s assume it’s a new game, so the answer is yes, it will be the same price.”

This does two important things.

The first is perhaps less important but no less interesting; it negates the industries need for Online Passes and codes. It is interesting that not a couple of weeks ago, EA dropped it’s online pass system to much celebration by gamers across the globe. And now we know why; the X-Box One is designed to completely negate the need for them. Not only that, but it can be assumed that a large portion of that fee will go back to the publisher, ensuring that they get a sizeable portion of the fee. This is obviously great news for publishers, who have spent years trying their hardest to minimise the second-hand market, and fail miserably.

The second is the bigger problem that the X-Box One will face: retailers.

We’ve been through this before, actually. Not too long ago, Sony had an idea to effectively control the PSP software market by ensuring that their machine used no physical media. People could buy cards, charge their accounts, but there was no physical media slot. This unit was the PSP Go! – and it bombed, thanks to retailers.

Sony’s aim wasn’t a million miles from what Sony are doing now. The problem is, retailers were not making enough profit from sales of the machine – having been sold to them at a much higher price than would otherwise have been the case – and the machine was, effectively, robbing them of business at the same time. It wasn’t just used games, but new games too which they couldn’t sell. With little negotiating power with Sony on the price front, many retailers decided the only way to stop the Go! from eating up their market was to do the unthinkable; not stock it at all. After a short time on the market, the PSP Go! was forgotten, quietly withdrawn and we all nodded knowing that really, it was the right thing to do.

Microsoft’s X-Box One isn’t too dissimilar, only you are buying a disc which grants you a single permission to use that title. “Permission”. That’s a key word here, you haven’t bought the game, you’ve bought “permission” to use it. This is legally to cover their backs, because we all know that servers are often taken down to the disgust of the userbase. They bought a game, requiring an online server, which may no longer exist. So the concept now is to change the terms of ownership, and insist that you are allowed to use the game so long as they are okay with it and all things work. Considering the increased server load which will come with these new titles, there seems to be an expectation that robbing the consumer of a little will help the industry a lot.

Retailers aren’t stupid, however. As we saw with the PSP Go!, they have a lot of power to negate sales where they feel the need to. Without sensible precautions, expecting the likes of GAME and GameStop (who both in the hours after the X-Box One conference saw their value drop!) to stock a product that is effectively destroying one of the most profitable arms of their business just isn’t going to be a realistic expectation. Microsoft must be aware that whilst the industry itself may be somewhat behind their policy, the retailer and the consumer are still two very important entities. A consumer can only buy what a retailer is willing to sell, after all, and if the retailer says no, then that vital gateway to the consumer is lost.

Anyway, back to the quotes. Microsoft Studio’s Larry Hryb next;

“”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.””

Now, playing a game at a friends house is something we all do. What we don’t tend to do is sign into our profiles at our friends house. And it’s not because we don’t want to share our account, nor remember passwords. The thing is, I know my network is as secure as I can make it. When I am out and about, my laptop is chock full of security features. As much as I love my friends, I wouldn’t trust them with my X-Box profile; if it is saved, they can kick me off anytime. They can perhaps even buy things on my account details and with whatever points I have in stock. The reason we don’t share is because we are all pathologically terrified of having our accounts stolen, or broken into, and the minute we do that on someone else’s machine, we are effectively granting them permission to enter our account.

Make no mistake that this is going to be a crushing headache down the road;

User; “My friend spent all my Microsoft Points!”
Microsoft; “Well, why did you let him into your account?”
User; “Because we couldn’t play a game unless I logged into my account! That’s your rules!”

In a world where digital security is everything, it’s perhaps short-sighted of Microsoft to completely miss this simple point; if a user does have their account compromised by a friend, then the user has limited legal recourse. Of course, the user has no choice – considering they wanted to play a game with a friend, say a new soulCalibur where all the characters had been unlocked. To link to the account, a profile needs to be saved on the console itself, which takes up hard-drive space – moreso that games need to be installed. This means that the account is now on another machine, and if the settings have saved the password – instant access to your friends account.

Not only will this be a headache for users, but for Microsoft, who will have to identify who actually owns what and when and why. Disputes between former friends will turn ugly and Microsoft will find themselves slap bang in the middle of it, expected to do something to which they have no serious answer. It’s a dangerous situation to be in and the public reaction to being put into this situation cannot end well for Microsoft. Eventually, the legal system will have to step in and decide and that is when the whole policy comes under intense legal scrutiny. If it doesn’t hold up, you can bet that Microsoft will be forced to pay up; and that will be a costly error. Just ask Apple, who recently had to pay parents a share of millions of dollars of compensation because their children were exploiting loopholes to buy in-app purchases. Apple insisted it was the parents responsibility to make sure their kids did not do this.

The courts disagreed.

The problem is that Microsoft are making this more complicated than it is now; the idea of progress is usually to simplify and add value, not create confusion. Ironically, Sony saw it’s share price jump following the X-Box One reveal by as much as 5%, and amazingly Nintendo also saw it’s share price rise by 2.5%. Microsoft saw it’s share price drop by a small but not insignificant 1%, which is not the best result after a big expensive show. Microsoft has been hammered by the insinuation of restricting second-hand sales and being able to give no clear, definitive answer to the questions that people have. The show itself was hardly a success; a new games console reveal that had thousands of gamers watching and was rather light on game content. But Microsoft weren’t prepared for the questions that were to take place after. They had tried very hard to orchestrate this to maximise the potential good press; but the questions and rumours that had been flying around needed to be clarified and given the chance, that’s all the press wanted to know about.

Consumers are concerned. Retailers are taking note. Microsoft is primed for a fight, and the only way we will know if this extremely contentious situation takes hold is when, understandably, the machine is launched and things have to happen in real-time. It seems Sony have confirmed there is no similar system for the PS4, and Nintendo may lock digital purchases but has made it clear that physical copies of their games can be shared around like any other generation. Microsoft are the company taking the risk here. And even if it has industry backing, there’s no guarantee it will take hold when it’s rivals are gaining more shelf-space in shops and stores.

And when it sounds like you will need to connect to the X-Box Cloud once a day, the consequences for not doing so we do not yet know, will consumers ever take to it? Or will the second-hand rule mean that Microsoft is doomed to relegation?

We shall know more soon enough, hopefully at E3. Where Microsoft are going to have an awful lot of explaining to do…

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