Saturday, 8 June 2013

XBox ONE - Already untenable?


The next generation of gaming consoles is upon us and both gaming giants Microsoft and Sony have recently unveiled their next iterations of gaming consoles.

While Sony took the approach of using their conference in February to tease us with upcoming game releases and details of their social platform for sharing gaming experiences, they kept a lot of the details (including what the PS4 will look like) under wraps. The hot topics such as DRM, backwards compatibility and the used games market were conspicuously absent.

Microsoft on the other hand decided to go all out, debuting the system design (it looks like a Betamax video recorder), the new voice and motion command interface based on the Windows 8 operating system, new smart TV options, commercial tie-ins with ESPN, a new Spielberg-directed Halo TV show and also got around to spending a couple of minutes talking about games.

After the big reveal however, unlike their rivals Sony, they were drawn into answering questions regarding DRM and used games. Without rehashing too much, what they said did not go down well with the gaming community. The jungle drums have been beating for weeks over the fact that gamers will not be able to trade their games in, that online passes will be required and a fee paid to play used games, that you can't lend games to a friend without them having to pay a fee...the PR disaster continued unabated.

Then yesterday Microsoft sought to clarify the situation -

The company has now said in a statement that games can be traded in, but only at "participating retailers".

"Xbox One is designed so game publishers can enable you to give your disc-based games to your friends," the statement said. "There are two requirements: you can only give them to people who have been on your friends list for at least 30 days and each game can only be given once."

Hmm...and cue the next round of outrage. Only at participating retailers - so not Ebay I assume - therefore keeping tight control of pricing for the second hand market. Only passed on to friends that have been on your friends list for 30 days and only given once.

This begs the question - why? Why is Microsoft (and potentially Sony who have been conspicuously quiet on  the matter - no news is not always good news) so hell bent with pursuing this draconian business model? By limiting what consumers can do with the products they buy, by enforcing 'rules' as to how, when and for how much they can derive secondary value from their purchase, do they not see that this could be potentially extremely damaging to the future of the gaming industry, not to mention affecting their profit margins?

There are some interesting ways of using content - you can play games from two locations at the same time, up to 10 people can be logged into your library from different locations and play your games BUT it is the sticky subject of reselling your games and buying new ones that is still a thorny issue.

The problem for Microsoft (and Sony if they follow this lead) is two-fold.

Unlike with the last generation of consoles, including the original Wii - there does not seem to be a defining and compelling USP (Unique Selling Point). With the Wii there was the motion sensor breakthrough - something that convinced many million non-gamers to part with their cash and buy one. It transcended traditional hard-core gamers and brought in many casual and first time participants.

Sony had the Blu Ray angle, incorporating a Blu Ray player into the PS3 at a time when it was a burgeoning and expensive media. Buying a PS3 meant you were getting a Blu Ray player AND a gaming console. There was a reason it made sense to buy it.

Microsoft decided to go with pricing, setting the price point at a much more reasonable level than Sony (despite no Blu Ray after siding with the ultimately doomed HD DVD) and then successfully introducing Kinnect. Cheaper was better for many consumers and led to increased sales.

But technology has moved on now. Now we have tablets, touch screen, mobile gaming, Steam, smart TV's, video on demand. Motion sensor gaming is widely available now, on all three systems. Blu Ray is now a prerequisite, as Blu Ray players are now cheap to buy and HD the norm.

So what is going to be the big draw about Xbox ONE? Voice command for TV? Hmm, I have a remote. A Kinnect sensor that is always on monitoring your heart rate and gathering market data? Too Orwellian for most. Windows 8? Now standard. You can watch TV through your XBox? I have a TV to watch TV. Steven Spielberg? After Indy thanks. Price? With the bundled Kinnect 2.0 it is rumored to be more expensive than the PS4.

So where is the USP that will get people to shell out over £300 on a new system? And then there is the used game issue...

If we leave the convoluted DRM system for a second and look at the wider macro-economic context. There is a global economic crisis, ordinary people all over the world (and specifically the European market which is the second largest market behind the USA for Microsoft) are being made redundant, have cash-flow problems, have seen savings shrink and household incomes disappear. Putting it simply people can not afford expensive luxuries like they once did in the heady days of the early 2000's. No-one is lending, unemployment is at an all-time high (particularly in the core 16-24 demographic) and all of a sudden the idea of shelling out £400 on a console with maybe one game is seen as a non-essential purchase.

Now factor in that the used game market is going to get hit hard with Microsoft's new policy. At present you can buy used games from independent stores and Ebay and even friends for a fraction of the price of a full price title. You can trade them in or swap them with friends. Not any more - now the XBox ONE will enable Microsoft to dictate the price of the second-hand market through their 'selected retailers' and kiss goodbye to selling your games on EBay or to your pals. By monopolising pricing Microsoft become the used game 'market maker' - essentially forcing gamers to pay more. Only the casual gamer and 'new to gaming' market - the one's that ensure that a console is a success, the one's who bought a Wii for the family - they don't have the disposable income anymore. Neither do the kids and students and the young adults. Why? Because they're unemployed.

So by restricting the used game market, in essence Microsoft are forcing gaming to become the pass time of the wealthy. By excluding those unable to afford pull price (and the price of next gen games is going up to £50-£60 per game) then they exclude those unable to afford it and dissuade anyone considering buying one who doesn't have the funds. Not exactly a sensible business model.

An expensive console with no clear USP, that brings nothing new or essential to the home, that will charge you an annual fee to play online, that is the most expensive console on the market, that monitors your living room activity, forces you to pay top whack for a game every time, doesn't allow you to sell your games on for cash to reinvest in other non-gaming essentials and restricts your consumer rights in favor of milking every last revenue stream?

No thanks.

Now the question is will Sony try to do the same? The future of traditional gaming hangs in the balance.