Why Microsoft's Dumb Move On Xbox One Might Actually Be Smart

The decision of Microsoft seems very illogical since it will be for sure, very unpopular among gamers. So is the Redmond giant devoid of judgment? Probably not. For several years, the video game industry has been fighting the second-hand market which represent a considerable loss of money to them.

[KillrateOmega]

What is up with gaming companies and used-games lately? Say I buy a Ford truck or something, it is now my truck. If I decide to then sell my truck to a friend, am I now expected to pay Ford a percentage of the money I made from selling the truck to my friend?

Answer: No. It is after all MY truck.

"The choice of Microsoft might not please the gamers, but it sure pleases the industry and this is critical."

It's also critical to have selling power and the PS4, with its different stance on used-games, is kicking butt on Amazon. If this is any indication as to how well it will do in the following years, then we're looking at a very successful console. No pub will turn their back on a successful console.

*Also, it's really sweet that I have to register on the site in order to get to Page 2... /s

[user5575708]

In the eyes of microsoft you're not buying "your truck" it never is and never will be "your truck". you bought a license to use "their truck"

[Foxgod]

Well technically, if something is yours you would be allowed to manufacture and sell them by the dozen.

But you cant do that either without being an official sales person for that brand of cars.

When you buy a car, you can drive in it, smash it, or sell it on.
And when you sell it on its gonna need maintenance sooner or later, meaning the creator of the car can sell new parts for used cars, that brings them money.

Videogames however do not have maintenance and used parts, its just a disc.

[Hicken]

No, Foxgod. That's if you owned all rights and patents to said product.

Being a salesperson gives you ZERO right to manufacture your own units. It only gives you the right to sell the units you have.

Your arguments are getting more and more stupid.

[FITgamer]

@Foxgod Where do come up with your logic? Or lack there of i should say. So your are saying if you didn't manufacture something you can't say you own it? GTFO I paid for my bike, i didn't manufacture it, and i can do what ever i damn well please with it. Sell it, give it away, or modify it. If i replace parts on my Ninja 650, i don't get them from Kawasaki so they see no money. I buy them from a third party and that third party isn't required to give Kawasaki cut. It should be no different with used games. The publisher isn't entitled to that money they already made money off the original sale and that's all they are entitled to. Also if publishers think by preventing consumers from buying games used will increase sales they are wrong. If they can't afford it or not sure if it's worth the money, they are just gonna pass or wait year when the game is half the price. So if publishers really want to increase sales they should drop their game prices and consumers will be more inclined to buy games new.

[r1sh12]

@foxgod.. No

What if my used car needs to be repaired and I buy after market parts which are not made by the manufacturer of the car?
e.g I buy a ford focus, the turbo breaks.
So I get it repaired, the mechanic shows a non ford part which has better boost and works out cheaper.
How are ford getting their money in this particular situation?

Your argument is flawed, stop trying to justify ownership with nonsense that MS are trying to use.

Ownership means you can do whatever you want with the item. Its not about making parts for it.

[JokesOnYou]

Killrate, actually your analogy isn't quite right because the original owner of X1 games isnt being charged anything to SELL their game its the 2nd owner that may or may NOT pay a fee on top of the sale price for the game. Also although its not popular almost every piece of software we buy it says in the terms of product purchase agreement legal jargon that we dont own the content/media/IP for anything beyond our specific personal use any redistribution is prohibited, blah, blah orsomething like that, its just that 99% of the time they either lock software by a license code or they don't care if you share it with a few people unless you make a 1000 copies and sell them= potential criminal action against you.

Anyway I think something important thats being overlooked here is game sh sh I've ring, most people like some of my friends dont read gaming news, they hear thongs word of mouth, my friends usually ask me questions with o ut bothering to research. I've talked to 3 friends now that called me saying they heard this or that about used game drm, I explained it, and also casually explained the new sharing policy, when it was all said and done all 3 loved the game sharing method so I think this article is missing a huge benefit that micro has implemented that if more gamers knew about while they may not like the drm they may see it as a worthwhile trade off.

[gamertk421]

@jokesonyou. I like to hear thongs word of mouth, as well. :)

[Gaming101]

lol wow... just wow... Foxgod, it doesn't matter whether a company can continue to make money off of a product after it has been sold. Whether you have that capability or not as a company will determine your profit making abilities, it never leads to the conclusion that consumers should no longer have the rights to ownership.

Besides, you're also wrong that game companies can't make money off of used games - it's called DLC stupid.

Also, GM doesn't make parts, they have suppliers who make parts, you're buying from suppliers. Plus, DLC is the only thing extra you can buy for a game, you can't buy used DLC. But I can buy used parts for my car, I can buy parts from different suppliers like Delco, there's competition there. So the analogy is completely baseless.

What you are seeing here is a company looking for more ways to make money. That's capitalism, and consumers will always be against it when it is first introduced. As a company you can remain competitive by sticking to older business models that people find acceptable, like what Sony is doing with allowing used games with no restrictions, and no ridiculous rules.

[Foxgod]

Cant be compared, because a used truck still brings in money.
Trucks wear down, and need new parts, whenever you have maintenance on your truck, things get replaced, and the makers of your truck earn money, by selling you new parts, this way the used car business can exist without too much problems.

However, when a used game is sold, no money flows back to its maker.

Thats why movies are cheaper, they also have an alternate source of income, theater, then on blu ray.

MS their solution might make used games more expensive, but at least the used market can continue to exist.

[KillrateOmega]

I know. I was just trying to make a general comparison, not necessarily a precise one.

The primary point that I was trying to make pertains to the concept of ownership.

[Hicken]

No, actually. Again, you're failing, because you're ignorant of the subject.

GM doesn't see a dime when I fix my car, unless I happen to go to one of their dealerships, or get their parts to repair my car.

Thing is: I can repair EVERY part on my car without having to pay GM one penny.

Could you just stop already?

[dennett316]

Used games can still bring in money - DLC sales. A cheap used purchase of a game in a particular series can lead to new sales of a future sequel if the game is well liked.
The problem with a lot of game companies is they simply don't want to compete in the proper way. They don't want to have to create a game that people don't want to trade in, they just want to bash a product out as quickly as possible and make as much money as possible - because they feel they're entitled to that money.
They are not entitled to success, they need to earn it. They're also not entitled to a cut of used game sales, just because they think they should be. That's nonsense. They made a product, and sold that product to retail....their transaction is complete. If they want a cut of used sales, they should do what the game shops do and take some of the risk, handle trade ins and used sales themselves and then resell the games - at least then they'd earn the right to any money back.

[Toon_Link]

Here's one for you maintenance analogy. Buy a used truck it needs maintenance, buy a used game it offers DLC. I thought DLC was how publishers made extra money off its customers. You remember those parts of the game that use to be considered part of the whole package?

[DialgaMarine]

The used game market CAN'T exist under Microsoft's system. The used game market works in a process. We'll use Gamestop as an example. A person buys a game brand new. They then decide to sell the game to Gamestop, who pays that person for the game, giving them an amount of money based on several factors (age of game, popularity, quantity, etc.) . Gamestop then resells the game to a new person, at a price according to how much they paid the previous person. Now, in M$'s system, that person now has to pay out more money for that game to work. Here's the problem: For the used game system to work, M$ would have make these used game fees extremely cheap, which is unlikely, so that person would refuse to buy the game used, unless Gamestop sold it for extremely cheap, which is unlikely because that would mean the original buyer of the game, when it was new, would have to have to sold it to Gamestop for extremely cheap, which, once again, is extremely unlikely. It's not to that there's no way that this system can't work, but it would cut down the number of used game sellers dramatically, thus cutting the number of used games in stock, dramatically, thus cutting down the number of used game buyers dramatically, until eventually there are so few used games cycling around that the market as a whole pretty much becomes nonexistent.

Now to further push my point of why the market can't work, think about this: Let's say someone spends $60 on a game brand new, but then either finishes it within a week or just decides that they no longer want it, so they sell it to Gamestop. Do think they'd be willing to sell a game that they just spent $60 on, for a very small amount, because now that store has to accommodate for M$ used fees? Do think that Gamestop would be willing to buy and sell for cheap, seeing as they would gain absolutely no profit in that case? Do think the used game buyer would still be willing to pay Gamestop's price, knowing that they now have to M$ a fee as well? Will M$ be willing to make the fees cheap, despite the fact that the buyer isn't buying the game new from them, and as such, they would still lose money on the game? The answer to all these questions is obvious, but someone in this little cycle has to lose. That's why the used game market simply won't work.

[sinjonezp]

Why us as gamers continue to read such phuckery from irrelevant journalist. It is now to the point where any five year old can create a page and have an opinion. The blind minds and eyes continue to preach that there is good in the x1. Just stop it. High price tag, no direct ownership, every game must be installed, and a list other things. My biggest concern is microsoft didnt even have playable units at e3! Your product is supposed to be coming out in roughly six months and you don't even have working units? Running your games on nvidia graphics cards when the system is supposed to be completely amd? That is a huge red flag to me saying they are possibly rushing to market. At least sony had real sdk at the show. Like I have stated, love my 360, but thus thing has disaster written all over it and its sad to see people defending this product.

[s8anicslayer]

A game requires no maintenance so the comparison is irrelevant, this is called greed by Microsoft and they are trying to get everyone on board and blind fanboys are being used to defend their greed and with no incentive either.

[ginsunuva]

Try selling your mobile or pc applications. A game is an app.

Yout argument doesn't work the way you think it does.

[KillrateOmega]

The joys of being the first guy to post a comment in an article. As soon that bad boy gets approved, a wave of replies crashes against you.

Also, it has been sufficiently brought to my attention that my 'Ford truck' analogy was not exactly the most pertinent to software ownership. My bad.

[Death]

A $60 game isn't the same as a $60,000 truck.

Go to your Playstation library and pick any game and read the User Agreement. You aren't buying your game, you are leasing the software for your personal enjoyment. The User Agreementis very clear. The gaming experience is a consumable, not a hard good.

[Sitdown]

You can buy that Ford truck but guess what...if you don't pay the yearly taxes its illegal for you top drive it, if you don't register it, driving it is illegal, if you don't maintain a license, it's illegal to drive it..... you have to regularly purchase gas for it to work. But most of all, the price for a truck is significantly greater.... see how this is not necessarily the best example?

[KillrateOmega]

"...see how this is not necessarily the best example?"

If you'll scroll up a bit, you'll see that, yes, I have already seen how this was not the best example. Again, my bad.

@Death and MikeMyers

Same basic message to you.

[Sitdown]

My fault... I missed all that .... just paying devil's advocate..... Cause I get your point

[KillrateOmega]

No problem, man :)

[MikeMyers]

That truck analogy doesn't fit with games and here is why. A person who buys a game buys it for the experience and then can be passed on to the next consumer who will get that exact experience, no depreciation. The other major flaw is if that truck cost you $15,000 dollars the maker of that truck sells it and makes a small profit. Are you trying to tell me games cost $60 to make? If a game cost 20 million dollars they need to sell a certain amount of copies to make a profit. They have a one shot deal unlike movies. Movies also have a theatrical and home video market to work within.

What game publishers should be doing is looking for alternate revenue streams and controlling budgets. If Tomb Raider sells 4 million copies but Square says they lost money then their business is not feasible. They should be offering a rental market too to get revenue from and to also make money off the used market which until now they don't.

[Cinuous]

ur a retard, dude already corrected himself n apologized, get over it!!!!!!

[kayoss]

Actually your analogy is partially correct. Here is what I think. The game disc you own is the truck, the content in that disc belongs to the publisher. Look at it like the parts in your truck ( muffler, radio, etc) are patented and owned by the publisher (manufacture). The road belongs to Microsoft (console, cloud, etc). When you own a truck, you need a road to drive on. What I'm seeing here is that Microsoft is taking an advantage because they own the road. If you have a truck but no road, then you pretty much can't drive your truck on microsoft's road unless you pay a fee. Microsoft is trying to control who can and can't drive on that road.

[rainslacker]

It's hyperbole. It's the same argument that was used for piracy.

From the article:
"For several years, the video game industry has been fighting the second-hand market which represent a considerable loss of money to them"

No facts to show how 2nd hand sales effect new sales. If they were available it would be in the publishers best interest to show them.

Obviously, publishers would prefer people to buy new. It's why they say that 2nd hand hurts the industry...again the same way they did for piracy.

Online passes weren't invented to combat the 2nd hand market, they were made to recoup money from it, much like DLC is used today in many cases. EA and Sony have both gone on record to say the returns weren't as profitable as they had hoped, and in EA's case said that the damage to the companies reputation wasn't worth the money they made off them.

Many companies, and high level executives within those companies, have even said that the 2nd hand market is helpful to publishers. These kinds of statements have come from company execs that we would first think to be ready to block 2nd hand, such as EA and Ubisoft and everyone's favorite person to hate, Bobby Kottick.

[TheGrimReaper0011]

I luv the title
"Why a dumb move may be smart"
However says that is not smart
Microsoft didn't prove itself this gen
It won't the next
Microsoft is promoting 4 year old games (assassins creed 2 and halo 3) Sony is bringing out 2 new IP for the ps3. Microdick aint releasing shit
And until they start showing RESPECT to the consumers, they will fall hard next gen

[NYC_Gamer]

I have a feeling that PS4 will beat X1 in North America this gen..It won't be because of the games it all comes down to being consumer friendly..MS had a ton of exclusives at E3 but none of that matters because the console is too restricted for indies and consumers...MS is turning into the Apple of the gaming industry with all these red flag restrictions..Soo,i'm going to skip over X1 just like i do when it comes to supporting Apple[closed]hardware..

[UNGR]

Restricting indies is bad, but it would never be the downfall of a console. You'd just get the butt hurt backlash of Mr. Blow, working on The Witness. Indies simply don't generate near enough revenue for it it be harmful to a console from lack of game sales, or fans participating in a boycott. Except for one in particular who's already working on the "sequel" for the Xbox One (Minecraft). It's a fine console if you have the internet to support it, Microsoft seemed to have forgot that most of the world doesn't have the infrastructure to support it, especially the USA.

[JokesOnYou]

So you used Apple to support your theory that more restrictive= less sales compared to competitors. Yet Apple's iPhone brand is indeed the best selling phone on the market. hmmm, OK.

UNGR I was agreeing with you until you made the comment about USA not having the infrastructure/ internet to support X1, actually its quite the opposite with waay more gamers having access to the internet in the US than dont= 78.6% as of June 2012 and thats for all Americans, among those who can afford a console its much higher.
http://www.internetworldsta...

Also that argument gets much weaker when you consider #1 you only need a brief connection that allows a few kilobytes worth of data and #2 a cell phone can be tethered and used for the brief authentication.

[NYC_Gamer]

I used Apple because of their closed hardware mentality..Android controls the smart phone market share with more units sold.

[Utalkin2me]

The Galaxy is the best selling phone on the market. And the andriod based phones stomp the iphone in terms of market share.

[JokesOnYou]

Yes Android OS as a whole leads sales but No individual brand cell phone line outsells iPhone(3,4,4s,5) including Samsung Galaxy S4 which I own(best phone ever imo) Android OS leads because its on almost every other brand smartphones while Apple's iOS is of course only on iPhones yet again iPhone is the best selling smartphone.

Edit: Although iPhone 5 was leading http://www.forbes.com/sites... just looking I did see that the G4 has now outsold iphone5. http://latino.foxnews.com/l... Nice! -I did my part and I stand corrected.

[morganfell]

@Utalkin2me

And the Android lead is expanding. The complete crushing of Apple is inevitable. They cannot keep pace with one/two punches from various companies that can introduce new phones far faster than Apple.

Also their restrictive policies are driving away purchases. Something neither they nor MS can learn.

Finally the hip perception of Apple, which was always cloaked smugness, is fading.

[JokesOnYou]

I don't like Apple at all....NEVER EVER owned anything Apple, but come on you gotta give credit where credit is due, after Blackberry the original iPhone was a helluva smartphone that introduced a lot to the market. Now since then they've fallen behind in many ways but again its still a iconic phone that many folks swear by and many have predicted Apple's doom for years yet their brand/company is one of the most profitable in the world, I think only oil companys, and maybe facebook or google have higher profit margins, realisticly EVERY company will eventually fail, its the nature of the beast but either way lol they are far, far from being completely crushed anytime soon.

[rezzah]

In terms of decreasing positive popularity around your product then yes it is smart.

[LeRise]

"Why seekingalpha's smart move on writing this article might actually be dumb".

[TotalHitman]

Why I'm getting sick of these stupid articles trying to justify the Xbone's stupid features.

[Axonometri]

I get it! Like when a guy breaks into a convenience store, spends 2 hours breaking open the register to find it empty. So he makes off with a beer and KitKat. Only to be caught leaving the front door by the police?

[Dante_007]

Yeah like when they said it would sell one billion xbox1 yeah not in this lifetime with those lame features

[the_espresso_kid]

As the popular opinion of the X1 continues to decline expect more of these sponsored by Microsoft articles to pop up with uncompelling reasons of why you should get an Xbox One.

[MrDead]

From the article.

"Sony preferred to satisfy the gamers directly by adopting the most "popular" position while Microsoft took the most "unpopular" one. The choice of Microsoft might not please the gamers, but it sure pleases the industry and this is critical."

Satisfy and support the gamers and you strengthen the industry pi$$ them off and you damage it. Its up to the dev's and publishers to make up the losses in the used games market they need to make the deal with the retailers if they are loseing so much. MS should keep their noses out and should not be allowed to make a penny from resale’s. Sony are doing the right thing.

[MysticStrummer]

"The choice of Microsoft might not please the gamers, but it sure pleases the industry and this is critical."

What pleases the industry doesn't matter much if the gamers don't go for it.

[AceofStaves]

Exactly. If gamers aren't buying games, there would be no gaming industry. Gaming isn't a necessity of life. It's entertainment, nothing more, and if something happens to drive customers away, those customers will simply move on to something else.

By pleasing the customer, you guarantee more sales and, potentially, you may gain more customers. That philosophy has been proven through all the previous hardware generations.

We'll see whether MS or Sony are more successful once the consoles release. Then, we'll get a clear answer to the question.

[rainslacker]

Is the industry really that against used games though?

From the three major US publishers
EA
http://www.gamepolitics.com...

http://www.gamespot.com/e3/...

Ubisoft
http://www.gamespot.com/e3/...

Activision(Bobby Kotick)
http://www.escapistmagazine...

In Japan, the used game market is huge. Haven't seen any reports of any major or minor Japanese publisher having a problem with that.

This is Nintendo's stance on the issue

Nintendo:paraphrase: Make good games people want to keep.
http://www.vg247.com/2013/0...

And we obviously know Sony's stance.

This is what I hate about the articles that make these statements. They don't do any research into what else is being said. They don't really take in the bigger picture.

Such as

GameStop: 70% of all trade in credits go towards new game purchases
http://kotaku.com/5932099/g...

and can't find the link, but more recently GameStop said that 17% of all new game purchases are made with trade in credits. 17% of new games sold through gamestop is a huge chunk of change for the industry to give up for the gamble of a restrictive DRM that gamers are pissed off about.

What it boils down to, it doesn't really matter in the end what publishers want, it's what the customer is willing to buy and accept. Companies know this...if they didn't before, they certainly do now.

[ssbains]

Microsoft introduces the next Dreamcast, crash and burn RROD console. What you sent around came around

[Daoshai]

Wow so many fanboys on these articles. The gamer world has truly become a pathetic thing. I'm embarrassed by association.

[-Gespenst-]

It's smart because they're gonna set up loads of deals with ISPs.

[wishingW3L]

this garbage site forces you to register and pay to read the rest of the article! Why was this submitted?

[Fakdafakinfakerz]

So now DUMB = SMART? Right...

[sync90]

If the industry's so bothered by used games, then release new games cheaper. £30 instead of £40

[Igniter]

The only way to sell games cheaper is through digital download. There have been too many single player games this gen that were not worth $60 but were good games. The ability to dd these games day one would lower their price. Developers just need an install base that they know they can sell dd's to. MS is guaranteeing developers this install base.

[sync90]

Well, i disagree. all ms are doing is alienating themself's from gamers, me included. if what you say is true, then why the hell are dd games more expensive?

[Igniter]

Current disc games that have become available as dd's are overpriced because publishers are still learning how to market these games. They will be adjusting prices down as they see that they aren't moving any units. And with the next gen, publishers may offer the DD versions of their games cheaper on day one than the disc. Or they may offer pre order bonuses only to the DD versions.

Also, games like State of Decay that skipped the disc and went straight to dd are enjoying more success because of the lower price.

[PositiveEmotions]

That guy is high on muchrooms

[SpinalRemains]

They are fun-guys.

[PositiveEmotions]

Lol ok bro lol

[SpinalRemains]

No?

Fungi?
No?

[themiracle]

locking page two of your poorly conceived article behind registration wall?
and these guys want to provide insight into MS's poorly conceived choices.

perfect.