Microsoft's Shortsighted Approach Might

With Microsoft having made it official that the new Xbox One will have draconian limitations on playing used games, sharing games and being played without an internet connection, the question now is whether the console is dead on arrival with gamers. Given that the Xbox division has been one of the bright lights at Microsoft in recent years (even though its profit contribution is fairly small), this is no small act of self-immolation by the software giant. Is it too soon to write the obituary of a console that hasn’t even been released to the public yet? Perhaps, but perhaps not.

Consider that Xbox One and Playstation 4 from Sony are going to launch at almost exactly the same time with almost exactly the same hardware inside. Sony has already staked out a marketing position targeting the hardcore gaming constituency. By contrast, Microsoft clearly downplayed that message at its launch announcement, touting the console’s ability to act as a TV companion at least as much as a Game machines.

With the E3 gaming conference coming Monday, perhaps Microsoft hoped to gain gamers’ attention then, but today’s news is likely to be so off-putting, it’s not entirely clear Microsoft will ever be able to change the perception around Xbox One. That perception: It’s only a part-time gamer’s machine with things like Kinect that hardcore players don’t much care about and a lot of money-grabbing features and “Big Brother” surveillance built in. This is supposed to be the future of entertainment, it’s worth mentioning.

The negatives have been detailed well in fellow Forbes’ contributor Dave Thier’s post that I linked above, but specifically, Microsoft is absolutely going to war with a couple of key features people have taken for granted since almost the days of Atari:

Your right to buy used games is no longer absolute. Publishers can simply make titles unavailable for resale or can possibly charge fees to allow you to “reactivate” a used game — even up to the original price of the game. There is a $2 billion used game market for a reason: Games are expensive. Who wins here? The publishers have railed against the used-game market for years because they don’t like not receiving a cut on secondary sales. But realistically, someone buying the first Call of Duty for $15 in the used bin is a potential customer for the newest version at $60 this Christmas. There was a marketing benefit that publishers received for free even without a piece of the action.

Game rentals as we know them are effectively dead. For the admitted minority of people who enjoyed services like Gamefly or borrowed a title for a day or two from Redbox, the restrictions on one’s ability to share games mean there will be no more of that. While there are some new sharing features built into Xbox One, they in no way replace the ability to just bring a disc over to a friend’s house and play the game whenever you want to. That behavior is more or less over. Perhaps new rental models will emerge, especially with all games having an option to download them. But make no mistake, this is war on discs and your rights of ownership. It hasn’t gone entirely well for music, movie and book lovers when it’s been declared in the past and it looks ugly here.