Thursday, May 23, 2013

Xbox One: One Last Post (then no more until E3)

Two things today.

First, I don't think people understand who is being excluded here. Traditionally, when you think of people who don't have a broadband connection, you think of rural, isolated areas, or some level of poverty.

So Xbox One is just excluding the people traditionally stereotyped as "backwards", right?

Except there's another category of people who do have broadband connections, but can't use those connections with the One. What about people with cellphones and tablets who use 3G/4G exclusively for their Internet connection?


Those people aren't "backwards". In some ways, you could consider them "ultra-forward". Wait, those people can't use an Xbox One, either?

Perhaps--and this is theoretical--you could create a hotspot with your mobile device and have Xbox One connect to that. Some games will require a persistent connection, though, and how much data will need to pass back and forth? What about data caps?

You may think the size of the demographic that doesn't have wired broadband access and uses 3G/4G exclusively is small, but just wait. It's going to grow, and quickly. It will be interesting to see how Microsoft handles this group.

I don't think Microsoft can afford to exclude anyone else at this point. There are over 100 million people just in the U.S. who still don't have broadband, and none of those people can pay Microsoft money for an Xbox One games. Well, they could, but it won't work.

You may argue that those 100+ million represented only a small fraction of Microsoft's existing customer base, and that might well be true. But Microsoft is clearly contracting the potential base for this new console compared to the old base, and this has historically been very, very unwise.

Second thing. I see people saying that the system for reselling games on the Xbox One--whatever it might be--is still better than Steam, because you can't resell games on Steam.

Let's look at a little history.

In the "old days", retail stores were a chokepoint on the distribution of content. Couldn't get your game into Best Buy? You were screwed. You were either in Best Buy or sending people disks by hand in the mail.

Some of those games were great, too. And they sold 200 copies because they couldn't get into the retail distribution system.

It didn't happen right away with Steam, but eventually, it became this incredibly healthy, diverse ecosystem for thousands and thousands of games that would never have made it to retail in the old days. It exponentially  expanded access. Even better, the pricing model today is so dynamic and flexible that 90% of what I buy on Steam is under $20.

Important point: because of that pricing model, I buy way, WAY more than I would have otherwise.

In other words, for consumers, Steam is expansive. It gives us access to more games--far more--and we buy more games.

Now let's look at Xbox One.

Those disc-based releases that require mandatory installs to the hard drive? Every single one of those games would have made it to Best Buy. Every single one.

No benefit there.

I'm fine with not being able to resell games on Steam, because like I said, almost everything I buy is under $20, and with games like Skyrim, I wouldn't want to resell them, anyway.

With the Xbox One model, 95% (probably more like 99%) of disc-based games will be $50-$60. There's no price advantage.

So there's no access advantage, and no price advantage, but Microsoft does do one thing successfully: they collapse the resale market. Before, if you possessed a physical disc, you had game access. Maybe parts of that game (EA Online Pass) were unavailable, but no one ever locked out single-player mode.

No more.

Now, you have the "bits" (as Phil Harrison puts it), but not the license. Microsoft has to grant you the license to use those "bits". So you can sell the data (the disc), but not the ability to access that data.

Look, nothing is going to be better in this system for the gamer. That's just the new reality.

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