XBONE – Sad Face

Here’s a link to an anonymous Microsoft employee (allegedly) explaining what they gave up when they rolled back their DRM strategy.  I’ll go over a few parts I find worth discussing.

We didn’t do a good enough job explaining all the benefits that came with this new model.  We spent too much of our time fighting against the negative impressions that many people in the media formed.

Extremely accurate.  There was not an ounce of positive spin for anything MS was pushing.   Quite the opposite.

Many will argue the development system is broken, and I disagree.  The development system is near broken, it’s used gaming that is broken…

“Many” being actual developers themselves.  If selling over 1 million copies at full price is a loss (Amalaur), it is not used games sales that’s the problem.  Used games are a symptom of the problem, pricing and value.

First is family sharing …  The premise is simple and elegant, when you buy your games for Xbox One, you can set any of them to be part of your shared library.  Anyone who you deem to be family had access to these games regardless of where they are in the world.  … When your family member accesses any of your games, they’re placed into a special demo mode. This demo mode in most cases would be the full game with a 15-45 minute timer and in some cases an hour.  This allowed the person to play the game, get familiar with it then make a purchase if they wanted to.

First, not anywhere in the world, only a place with online access to XBOX Live and an account active.  Second, I do this today by handing a copy to my brother and he has an unlimited demo.  Third, many games today have demos or videos to show how the game is played.  Do people really buy games blindly?

I stand by the belief that Playstation 4 is Xbox 360 part 2, while Xbox One is trying to revolutionize entertainment consumption.  For people who don’t want these amazing additions, like Don said we have a console for that and it’s called Xbox 360.

And this is really the crux of the matter and where I think there is the largest disconnect between the audience and the provider.  The XBOX (and the Playstation) are gaming platforms.  Gaming platforms have existed “as a thing” for nearly 40 years and have had only minor changes over that time.  The core process is the same though there have been additional services layered on top.  I have a game, I have a controller, I have a TV, I have a couch.  I can bring the console on road trips.  I can play my friends games when he comes over.  I can play with headphones on when my S/O is in the other room.

The XBONE broke all of that and didn’t sell an upside.  Here’s what could have helped.

The family program would have been great if they had access to your games without a timer.  DRM would have been acceptable if prices were lower.  DRM would have been excellent if there was a digital used game marketplace.  DRM would have been OK if you only needed to check in at first install.  DRM would have been OK if you only lost multi-player functions while offline.  DRM would have been acceptable if you provides 2-3 use case examples.  DRM would have been fine without region restrictions.  Kinect would have been acceptable if you could turn the thing off completely.

None of those features existed.  Whatever benefits the console may have had, each one of these items combined to make it a deal breaker for the general gaming population.  A revolution happens when there is a need for it.  When things are desperately bad.  You don’t impose a revolution.  If you try to, then you get exactly what Microsoft has been getting for a year (including Windows 8) massive and un-ending backlash and perhaps a revolution you didn’t want.

XBox One Eighty

So news here, here and here.

Before I get into what this means, let’s refresh our memories a bit here.

Can’t get online?  Too bad, buy a 360.

We can’t just flip a switch to turn off DRM.

This is the same company that said we had to live with the fact that there was a new paradigm and no amount of complaining by the public would make it change course…

And here we are.  Today’s announcement that the XBONE has removed nearly every single DRM function from their system.  There is but a fraction of a degree between what they’ve done and a true 180.  To summarize:

  • No need to be always online
  • You DO need to be online to register the game initially
  • No check-ins every 24 hours
  • Discs work similar to the 360, in that they need to be in the console to play
  • Downloaded games work offline or off
  • You can rent, trade, exchange games as you do today
  • Works in all regions (AUS games in US)

What are you exchanging for this?  The ability to play games wholely from the cloud, meaning you didn’t need a disc in the console.

So after taking what by most accounts is the most massive pounding in gaming history, completing denying reality, telling gamers to basically smeg-off, flipping the bird to the used game industry (GameFly & Gamestop), losing a VP for trying to push always online and still selling games for the same price as the PS4 they decided to turn tail.

Can you imagine being inside the Microsoft offices the past few weeks? It must have been like a madhouse of scrambling from a PR side, trying to spin the “future” of gaming.  Even Major Nelson had a hell of a time trying to pitch it.

Still, this is good for Microsoft.  With ~4 months to go, they’ve removed a massive barrier to sales.  Sure, you still have a camera that’s always one.  Sure you still need to have internet access to initially launch a game.  Sure, it’s still $100 more than the PS4.

At least the playing field is a bit more equal.

The Crash of 2015

Pure speculation post incoming.

By the end of this calendar year, all the new consoles will be on the market.  The 2013 holidays will see the “hardcore” gamers buy either a PS4 or XBone. True market penetration won’t really occur until the fall of 2014.  It’s cyclical, happens with most any product.  I would hedge my bet on a particular brand but that doesn’t really matter much for this topic.

What does matter is the cost structure of said consoles and games.  Microsoft has stated that their first-party games will be $60.  Sony has said the same.  I’m disappointed in the former since one of the main draws is the reduction in pirating/used game sales, therefore companies should be making a lot more money.  You’d think the prices would be lower.  It’s  a bit more expensive than today’s games and the dev costs should be lower since the architecture between PC, PS4 and XBone are near identical.  Game prices are part 1 of the problem.

Free to Play (buy to play, freemium, cash stops) is a still relatively new financial model that no one really has a good grasp on.  A company can get 1-2 years tops out of a cash stop before devolving into lockboxes.  There comes a point where there is simply nothing left to buy and the company still needs money to operate.  There are more games that fail this particular step than succeed (waiting on Marvel Heroes to discuss this point).  Part 2 of the problem.

DLC is bleeding between the line between core play, additional content and value.  Gone are the days of horse armor but here are the days of Protheans.  While Skyrim DLC can prove to add value to the entire game, the prevelance of in-media-res DLC (like Deus Ex) is disturbing.  Entire chunks of the game are missing.  Part 3 of the problem.

Micro/macro-transactions have yet to find a floor or ceiling.  LOTRO horses, EvE monocles, sparkle-ponies are in a class of their own.  Paying for crafting material in Dead Space 3, or simply having a cash stop button on every screen, regardless of the underlying payment model, is garish.  Paying for XBox Live and still getting ads is ridiculous.  Part 4 of the problem.

Disconnect with the core audience.  Back in the day, the core audience was 18 year olds sitting in a basement.  They still exist but the core spenders are older, those with more disposable income yet conversely less time.  An older person has a better understanding of value for service yet there is a growing divide between AAA developers and consumers.  Ni No Kuni, Tomb Raider, BioShock and The Last of Us are supreme examples of quality and sold extremely well.  Gears of War and God of War are cash grabs that are bleeding companies.  Part 5 of the problem.

Independent developers are the future.  It’s not a question anymore, it’s simple reality.  They cost structures are lower, they aren’t jaded, they target their games to a specific market and have lowered expectations.  The gate to entry is small (especially on PS) but the market itself is becoming saturated.  This makes it hard for a new indie game to reach the spotlight, outside of word of mouth.  Part 6.

A crash occurs when a bubble bursts.  A bubble occurs when reality is artificially inflated up to expectations, in order to turn a profit.  Gaming today seems to be heading farther and farther away from reality and more into slide decks for quarterly reports.  Looking from the outside, it seems more like a head scratching exercise of “did they really think that would work?”  The market is heavily saturated with the same product on every corner, with less features and more cost per iteration.  There are only so many SWTORs that can launch and fail before bankrupting a company (see THQ).  You can’t spend $100 million to develop a game that sells 100K copies or only provides income for 3 months.

The gaming paradigm that exists today is doomed for failure as it is simply not sustainable.  There’s no one single problem to fix, it’s a plethora of systematic failures driven by a core concept – getting more money out of gamer’s pockets.  We’re nearing the edge and it’s a hell of a fall on the other side.

E3 – Tone Deaf

When asked what a person with unreliable (or not any) internet access should do for the XBone, Microsoft executive Don Mattrick had this gem to say.

“Fortunately we have a product for people who aren’t able to get some form of connectivity,” Mattrick said. “It’s called Xbox 360.”

While not as bad as Mr. Orth’s twitter tirade which basically said you don’t live in society if you don’t have permanent internet, there is a clear sense of contempt from from this company that just baffles the mind.  It’s like they have a vision for their products and services that is completely disconnected from their user base.

I mentioned yesterday that MS was going to need some significant PR spin to handle the next few months.  I guess that will only apply after E3 is done.

PS. I wonder how much bandwidth their service will take and how that will impact internet service providers.  I know Netflix is changing the way my provider works and there are problems in the EU for throttling certain services.  Will be interesting to see.

Console Wars – Cart Firmly Ahead of Horse

Did you know that America’s Funniest Home Videos (or AMV now) is the longest running reality TV show?  I think it has to do with the idea that you know something is going to happen but you want to see it anyways.  I mean, who doesn’t want to see more of “ball hits crotch”?  You know half the episode is going to have that but you still watch it.  It’s a comedy of errors really.

I feel like Microsoft is in the same boat.  How many years now have companies tried to put in draconian DRM into media?  Remember when Sony put rootkits into their CDs?  Ubisoft gave up on the “always on cloud” DRM when the servers simply could not handle it.  SimCity had probably the most disastrous launch in gaming history, enough to lose a CEO.  Even the lead up to the XBONE reveal had it’s share of PR problems.  I don’t understand how a multi-billion dollar company did not think that they were going to have a problem on their hands.  Every single sign, every single trend said that they were heading into a storm.

And when the big reveal came about, they didn’t have detailed answers for a completely new way of operating.  I  mean, you know you’re going to cause a heck of a storm in PR.  You’re going to break some companies’ business models (Gamestop).  You are surely going to light a massive fire in the pits of gaming.  And your answer is 2 weeks of silence? Maybe they were hoping Sony would come onboard, then it would have put the ball in their court.

I mean, I get the want to move outside gaming.  There are more people who watch TV (streaming or not) than there are who play games.  The price point for that market is around $100 right now, not $500.  The only people willing to pay that price are the hardcore gamers, you know, the niche of gamers who have been royally ticked off since the initial reveal?

I get questions about why Steam is excluded from this discussion, given that you can’t trade games.  There are a few reasons for this and foremost is that Steam provides a service while Microsoft provides a platform.  I can play Steam offline for a trip to the cottage.  I can install the game on another computer a near unlimited amount of times.  It has access to many more games.  Prices on said games reach astronomically low prices.  Every single choice Steam has made has been with the consumer in mind.  Consumers, in turn, have accepted the service terms because it meets their needs.

Sony seems to have won E3 but there are many months to go before system launch.  The irony is that Sony didn’t do anything different than what they did in the past.  How do you get accolades for offering vanilla ice cream?  I expect that Microsoft HQ is going to go into silent mode for the next few weeks and re-jig their PR plan.  This cannot have gone anywhere close to what they had expected, even though every sign I could read said it turned out exactly like expected.

I think this past month will be reviewed for years to come in marketing classes and the lessons learned will have a major impact in all future technology launches.  There are simply too many gaffes and gaps in logic to not merit further scrutiny.

E3 – Day 1

I know E3 lasts a few days but really, after today, what’s left?

Microsoft started the day off with a good presentation.  Here’s a list of the XBONE games coming out.  $499 is more than I am willing to pay but hey, for all it does I think that’s a good deal.

EA and Ubisoft both had presentations.  Basically Sports/Battlefied vs Assassin’s Creed/Rayman.  Yay?  Star Wars Battlefront does sound interesting though.

Sony had a pretty damn good presentation.  Backwards compatibility (sort of), decent amount of games, $399 too.  Oh, and you can share games and in 3 years when you want to play an old game (like I played FF10 a few weeks back) you’ll be able to, without the crazy DRM XBONE has.


I’m not pointing at a winner or loser here.  That will happen a year after launch of these consoles.  Considering that E3 is meant to showcase games for gamers though… I think there’s a clear advantage to Sony now.  Do I think that Microsoft will go back on their earlier points of online requirements, Kinect and all that crud?  Not really, as it would require a rather LARGE change to their architecture.

I think the first day of E3 was like a cannon shot across the bow of gaming from two massive companies.  The next few months leading up to the holidays are going to be quite interesting.