Xbox One Plus PlayStation 4 Equals Playing Games in a Diskless Future

E3 2013 is winding down and boy, was it chock full of news. Sure, there were a lot of games shown at the big show, but all the conversation has centered on the online and used game policies of Sony and Microsoft. From Sony’s announcement that the PlayStation 4 will support lending and sharing disk-based games (as evidenced by this instructional video) to Microsoft going to the other way, saying that the Xbox One will require an internet check-in every 24 hours, fans were divided.

Microsoft executive Don Mattrick even said that if you don’t like the online check-in of the Xbox One (or work on a nuclear submarine apparently), then get an Xbox 360. On its face, that comment seems a little shortsighted on the part of Microsoft. Why alienate most of your customer base likely to make the jump to the next console by saying if you’re not happy with its features to stay where you are?

Microsoft’s comments have lit up the Internet, with many Xbox 360 purists swearing off the Xbox One, while others are a little confused as to what they’re thinking. What’s more is that the Xbox One will cost $499 versus $399 for the PlayStation 4. Surely Microsoft has some grander plan they’re not revealing to gamers just yet right? The short answer seems to be yes, but it’s probably going to take a few years for that answer to fully make sense.
It’s rapidly becoming apparent that Microsoft is envisioning a future where games aren’t being sold or played as disks. Rather, they like the idea of digital delivery and the online check-in just facilitates that process that much easier. Valve has proven with Steam that fans will flock to a service that provides great value and the ease of downloading games, rather then waiting in launch lines or for delivery of the product. The 24-hour check-in is merely laying the groundwork for Microsoft to move towards a similar delivery model, as it will verify ownership of the games via the check.

The reasoning for the moving to such a delivery system is two-fold. First, it gives Microsoft greater control over the economics of making and selling video games. In the aforementioned scenario, Microsoft is reaching into the used-game market that GameStop is currently king of and strangling it. The disruptive force of a company as large as Microsoft on the used game industry is music to the publisher’s ears, as it means they’ll see more of the residual revenue from their games; revenue which, for the past few years, has filled the coffers of GameStop.

On the flipside, gamers lose a little control over their purchases, but that’s something that doesn’t really seem to bother the vast majority of consumers. Take a look at any other marketplace (iTunes, Kindle, Steam) and you’ll likely see hundreds of thousands of purchases on a daily basis. These users are making these purchases knowing full well that the product they’re buying isn’t technically “theirs” and that they can’t resell it, but are perfectly content to make the sale anyway. It’s likely that Microsoft views those marketplaces in a similar fashion and thinks that it will work for the Xbox One as well.

The second reason for the delivery system theoretically is for the gamer. Gamers who can get the games they want when they want will definitely be happier for it. There were many fears about the logistics of borrowing games from friends, something that’s really helped the industry thrive and harkens back to the olden days of gaming. It looks like Microsoft has something in place for that as well, which goes back to the online check-in. The check-in will validate “ownership” of the game, checking to see whether it’s been sold or borrowed.

Admittedly, there is something alluring about the thought of being able to download games directly to your console, as opposed to having to buy the disk, install the game and then boot it up. And Microsoft isn’t the first one to do this kind of delivery system. What they’re betting on is that as a gamer you’ll like the ease of buying and lending games. Early reports seem to indicate that you can lend a game much like you lend a book on Kindle: you select a Gamertag, assign them ownership and they get to play it. The catch of course is that you can’t play it while it’s loaned out, which is no different then lending a disk.

The most glaring drawback to the whole system is right of first sale. If Microsoft offers all of its games digitally and moves away from disks that means you can’t really sell it or inject it back into the used game circulation. This is great for Microsoft and the publishers, but not so much for you the gamer, since you own it for good. And “for good” basically means until Microsoft stops supporting the games and turns off the servers. That’s a problem with the entire cloud delivery system as a whole; clouds don’t tend to stay in one place for long and move away—or worse—dissipate completely.

Building up to the proverbial holiday season will be quite interesting indeed. Microsoft is staking their reputation on the assumption that gamers want what they’re loading the Xbox One up with. They’re gambling that the PlayStation 4 not offering a similar proposition won’t be as appealing to gamers and won’t last in the long run. It’s obviously too early to tell which console will succeed (or fail). It could be one or it could be both. The fact is that console gaming is on the precipice of major culture shift in terms of getting games to gamers. Whether or not gamers agree remains to be seen.