Saturday, June 15, 2013

Theory for why 24 hour checks on XboxOne are necessary

     This is my theory for why Microsoft added a 24-hour online check requirement for Xbox One. There are a few things you have to understand before we get to the DRM.

Part 1: 
     It is clear that Microsoft wants to switch to an all digital system. The very fact that discs become coasters so soon after buying them is enough proof of that.
     If that's the case, though, why does the Xbox One support discs in the first place? Why not just distribute games like Steam? It's a good question. The reason for this is twofold. First, even though Microsoft is certain that most households in their target countries will be able to provide the minimal internet connection needed for their DRM checks, they are probably afraid of a situation where users can't buy Xbox One games because their internet doesn't allow for the kinds of large bluray-sized files needed for next gen games. Installing off of a disc eliminates this potential problem.
     The second reason is retail. Even though Microsoft could foreseeably cut retail out of the software game, Microsoft would have an INCREDIBLY hard time selling the console itself without the aid of brick and mortar stores. Given that retail will still be important to Microsoft, they need to give retail a reason to stock the X1. Not too many stores would want to heavily promote or give much shelf space to a product that sells only itself when there are products like the WiiU and PS4 that will provide more long lasting revenue streams through continued software sales.
     So, even though Microsoft wants all digital (like apple and steam), it still needs to support discs.

Part 2: 
     Used games. Microsoft would probably prefer for there to be no used games. This would help them control their market, it would make publishers happy, and it would help stop piracy. If that's the case, then why doesn't Microsoft eliminate Used Games?

     Another valid question. There could be two reasons for this. The first is that Microsoft actually doesn't want to do away with used games and sees the trading of digital content as valuable for an all digital future. The second reason, which is less forward thinking, is that Microsoft has to keep used games in order to prevent a backlash.
     The first part of the backlash would be from the consumer. Consumers like the ability to trade games. Even consumers who don't trade games in or buy traded in games see value in being able to buy and sell used games. The consumer backlash would probably be more about what the consumer is being told they can't do and not about what the consumer actually wants to do. I'm sure there are quite a few gamers who didn't realize they cared about used games until someone told them they weren't allowed to have them anymore. Consumers don't like losing their consumer rights.
     The second part of the backlash would comes from, again, retail. Remember, Microsoft still needs retail to sell customers their box. On top of that, Microsoft benefits greatly from the kinds of free press and hype-building given to it by stores like Gamestop. If Microsoft did away with used games, it would maybe kill Gamestop. The loss of Gamestop's retail chain would hurt Microsoft's sales and be, in general, bad for gaming. Even if many gamers don't like Gamestop, it is hard to imagine the industry having as strong a retail presence without a dedicated games chain (just think of what happened to CD shopping when Tower Records closed).
     Even if Microsoft's potential prohibition of used games wasn't enough to kill Gamestop, it would, at least, make Gamestop very angry. This would be very bad for Microsoft. If Gamestop got mad enough at Microsoft, they could outright refuse to sell the Xbox One. At the very least, they certainly wouldn't try very hard push sales of the Xbox One.

Part 3: 
     I'm with you. Even though the presence of retail discs makes it seem otherwise, Microsoft wants an all digital future. In doing so, however, it cannot risk losing used game sales for fear of dealing with a consumer-level and retail-level backlash. Where does the DRM fit into this?
     The DRM is there because Microsoft needs it in order to make used game sales work. The 24 hour check is there to allow for a business model that can facilitate content trading in an all-digital landscape.
     Time for a hypothetical situation. Let's say that Bob wants to trade in his copy of Watchdogs. He goes to Gamestop and sells them his game disc. However, because Watchdogs is still on Bob's hard drive, something must be done to prevent Bob from playing the game he just traded in. Without such a system in place, Bob could simply trade in a bunch of game discs to Gamestop but still keep and play the actual games because they are still on his hard drive. Major Nelson recently gave a very PR-ish reason for why discs can't be used as an authentication tool if someone's internet goes down. What I just told you should have been what he told people. When games are designed to run without a disc, the disc is no longer a viable authentication tool.
     So the question is, how does Microsoft make sure that Bob hasn't traded his game before he plays it? Well, unfortunately, Microsoft needs to check Bob's account. It needs to see if he still owns Watchdogs and there are really only two ways to do this. Both ways require the internet. The first, is to do a DRM check when Bob wants to play Watchdogs. By doing that, Microsoft would be able to block Bob's use of the game if it saw that it had been recently traded in. This solution offers very little breathing room and could very likely lead to lots of headaches due to the number of people needing to log in to authenticate during peak gaming moments (think Sim City 5)
     So, instead of doing an account check for every game that's loaded, Microsoft decided to give themselves breathing room by using a single system-wide daily account check. So, let's get back to Bob. Bob just sold back Watchdogs. Funny thing is, though, that Bob will probably be able to continue playing Watchdogs until Microsoft does its 24 hour DRM check. After that, Bob's account will no longer have the rights to play his traded in software. And that's how the DRM allows used games to exist in an all digital business model.

Part 4: 
     Profit. And there you have it. Microsoft needs 24 hour DRM checks because they need to allow for used games. They need to allow for used games because they don't want a backlash from retail chains or from the consumer.
     The big problem is this. Microsoft's vision was never going to make anyone happy in the short run. They want an all-digital future even though the business model for it isn't really solid yet. This is not a Microsoft exclusive growing pain. For example, once it's on my account, there's no way for me to give my brother an itunes movie I don't want anymore. Though the long run may finally end up in Microsoft's favor, it's clear that they have to inevitably deal with some form of immediate backlash.
     So, they had to make a decision. What will cause the worse backlash? Should they create an app-store like model for the X1 and simply allow the "no-used games" backlash to kill them? Or, should they allow used games and let the "anti-DRM" backlash kill them?

Part 5: 
      Conclusion. Considering where the future of gaming is heading, Microsoft's choice to go with daily DRM checks was probably the lesser of the two evils.

Part 6: 
     Bias. That said, I think it was a huge mistake. Microsoft certainly wants to follow in the footsteps of apple and steam but in wanting to, has misunderstood their market. The people who would be okay with Microsoft's digital future are the people who are already gaming on the PC. People who game on consoles want and expect different things when compared to their PC-gaming brothers/sisters. For example, internet authentication is a deal breaker for most console gamers whereas it's "business as usual" for the PC crowd. Microsoft should have known better than to expect a console audience to be accepting of a PC (or smartphone and tablet) business model.

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