Nick Gibson analyses the thinking behind Microsoft's Xbox One strategy

The once and future console

Microsoft’s dramatic Xbox One strategy wobble has been portrayed as the result of a stand-off between gamers and Microsoft, with gamers the victors. As the dust settled from this remarkable volte-face, a succession of commentators started to wonder what gamers had actually won; the retention of the status quo just at the inflection point where you would have expected a major leap forward.

This month, I want to explore whether the console manufacturers have blown a golden opportunity to innovate with its new generation, and what benefits that innovation could theoretically have brought to the console games market and its major stakeholders.

Nine years ago, the launch of Half-Life 2 became mired in controversy due to its strict internet connection requirement and mandatory Steam installation. Retailers were up in arms, some even refusing to stock the game. Forums were awash with irate gamers upset at such onerous impositions and restrictions.

Boxed product MMOs had been around for years, but Half-Life 2 was different, a hugely anticipated triple-A game aimed at the mass gamer ranks. Half-Life 2 went on to manage over 12 million unit sales. In the process it helped convert the core PC gamer audience from online sceptics to the believers they are now, paved the way for online authentication as the standard for PC games and created significant momentum for the transition to digital delivery.


Microsoft was arguably trying to achieve something similar with Xbox One’s original online requirements. Despite the fact that, based on the manufacturers’ own figures, console connectivity rates have never exceeded around 70 per cent of their installed bases, Microsoft clearly believes that the benefits of this strategy outweighed the cost of sacrificing the 30 per cent that cannot, or is unwilling to, connect their console to the internet. This was a major calculated gamble and one that neither Sony nor Nintendo were willing to take.

I believe it was a risk worth taking, however, although its initial proposal for 24 hour check-ins was unnecessarily draconian. As Valve and other PC games developers discovered many years ago, an online service requiring a simple, single online authentication for all games pays off in the long term with substantially reduced piracy rates and a broader acceptance of downloads as an alternative to boxed products.

Tying a game to a particular user like this may sound restrictive, but does not need to be, and could have actually enhanced player accessibility. As Microsoft had originally proposed, a particular user’s games could be accessed from any location via the cloud, or physically taken to friends’ homes and played. The rights would simply follow the account.

Ironically, one of the biggest potential benefits of an online authentication system for all new games could have been with used game sales. The ability to trade used (for example, already registered) games via the likes of GAME and GameStop could have remained with a point-of-sale ‘deauthentication’ service that would notify the console manufacturer automatically that a particular SKU has reverted to its original ‘un-owned’ status.

For gamers, it would add no complexity nor impact their ability to trade via these stores. Far from inhibiting retailers, such a connection direct to the console manufacturer could open up a world of new digital sales opportunities by giving gamers the ability to buy any digital content at retail.


Crucially, such a system could also have been used to provide an additional massive benefit for gamers and one that would have put consoles ahead of other games markets: digital trade-ins. Whether downloaded or from a true boxed product, the rights to console games could be transferred digitally with relative ease.

Such a used game trading platform would not only substantially increase the accessibility of used game trading, but also allowed console manufacturers and developers/publishers to share in the revenue this trade generated; something they clearly crave.

Microsoft’s original Xbox One strategy was therefore something of a flawed gem; it was unnecessarily restrictive and was revealed in a thoroughly confusing way with little explanation of how it would benefit the most important stakeholders: gamers. Clearly, this was not the way it played out.

Microsoft was attempting to bring console gaming not only in line with PC, web, and mobile but potentially push it beyond them. It is shame therefore that such progress that could have benefited all the stakeholders will not now take place with this generation.

[Interested in contributing your own article for Develop’s readers? We’re always on the lookout for industry-authored pieces on development-related topics. Email for more details.]

About MCV Staff

Check Also

IRL – tickets now on sale, nominations open – join us at the comeback industry event on September 16th

IRL will be a casual, inclusive event, designed so that anyone and everyone in the industry can attend, meet colleagues, network, and applaud our collective efforts