20 June 2013

Insert "Xbox 180" Joke Here

Since this is likely to be the "big" story in the gaming world for the rest of the week, I figured I would just pitch my two coppers in the pot now and get it over with.  I'm sure by now you've heard the news that Microsoft is "walking back" some of the controversial aspects of its upcoming Xbox One console.  Specifically, the "24-hour check in" requirement, and the restrictive resale and redistribution policies are being revoked.  Pretty much everybody was happy about these decisions.  Gamestop and Gamefly both released supportive statements.  And for those of you that are in the stock market, Microsoft's stock price jumped as well as Gamestop's.  Interestingly I haven't seen any statements from any of the major game publishers as yet.  I was always curious how they viewed this little "scuffle" between Microsoft and Sony in terms of DRM and redistribution policies.  I have to imagine that if I am EA or Activision or Ubisoft that I was "silently" cheering on Microsoft to prevail in this, but that's just a guess.

So let's look at the practical repercussions of this.  First, let's not mistake this for anything other than exactly what it is.  Microsoft did not want to do this.  Consoles aren't designed and developed overnight.  They certainly knew for years that this was the direction they wanted to go with the XB1.  For whatever reason, they decided this was the course they wanted to take and either misjudged or simply didn't care what the reaction of consumers might be.  Well, once they found out what the reaction of consumers was, their accountants did the math and realized that the cost of going forward with this policy would be higher than the cost of reversing it.  That's all, simple mathematics.  This was not Microsoft "seeing the light," or giving a damn about what consumers actually want.  This is a simple economic equation.  To go forward with the XB1 as designed was determined to be more costly than the hardware and software changes that would be necessary to "walk back" those changes.  So they walked them back.

That said, this is a major change for Microsoft to contemplate.  As we just noted, consoles are not developed overnight.  For Microsoft to do such a drastic change in such a short time is rather impressive and unprecedented.  XB1 is still scheduled to launch in November, so now they have five months to make all the necessary hardware and software changes, test them, and incorporate them into the system prior to launch.  Now I don't pretend to be an expert regarding hardware design or software engineering, so I really don't know how difficult a task this is going to be, but I can't imagine it will be easy.  In fact if I were an engineer in Microsoft's Xbox division, I would be sweating rather profusely right now. 

The other significant consequence is it brings XB1 back into competition with Sony's Playstation 4.  In fact, depending on how much your value console exclusives (or how much you are still creeped out by Kinect) I would argue it almost puts XB1 back in the lead.  Let's be honest, all PS4 really had going for it were its exclusives, and the fact that Sony is sticking with the "tried and true" policies regarding Internet connectivity, resale, used games, etc.  Some of the things Microsoft is doing with XB1 are very appealing in a general entertainment sense.  I downplayed them before because Microsoft seemed to be working so hard to emphasize them at the cost of true gaming, but when you look at it, the XB1 brings a lot of interesting possibilities to your living room.  Also you have to remember that the $500 price point "prices in" the Kinect as well.  Sony's equivalent device will be sold separately so if you want the same package, the price points become more similar.  So at this point it really just comes down to which console's exclusives you like more, and just how much the "always listening" Kinect might bother you.

Bottom line, the next generation console war is entirely up for grabs at this point.  Sony grabbed the initiative at E3 but to their credit, Microsoft decided they weren't going down without a fight and committed to a major change in order to level the playing field.  I know we still have a ways to go before the flag drops, but right now the pressure is on Sony to give us another reason to buy a PS4, because they just had their biggest "advantage" yanked right out from under them.

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