Used games or not used games – for Microsoft, the rest of the games industry and millions of gamers, that is the question.
Controversy and confusion erupted last week after the company finally took the wraps off its next-generation console, the Xbox One. During its press event, Microsoft didn't directly address the long-simmering rumour that the console would always need to be connected to the Internet to play games. Executives then made a further mess of the situation in follow-up interviews by suggesting pieces of a puzzle – sometimes conflicting – that evidently has not been finalized.
Make no mistake, this is tough stuff: Getting this wrong could seriously damage Microsoft's chances at success with the new console, even if getting it "right" could end up damaging other related businesses.
An attempt to stitch those conflicting reports together seems to sort into several possible outcomes. One is that if you buy a game, you'll have to install it and tie it to an individual account, whereupon you won't need the disc again, unless you want to play it on a different console. If you bring it over to a friend's house, for example, you'll be able to play after installing and signing in to your account. Once you leave, though, your friend won't be able to access the game.
Another possibility is that you will indeed be able to sell the disc to the likes of EB Games or GameStop, in which case yes, there will still be a used game market. However, anyone who buys the used disc might have to pay an additional fee to re-activate it. What that fee would be or who will levy it – Microsoft or the game publisher? – is not yet known. There is also the rumour that Microsoft could get a cut of that fee, as well as the distinct possibility that it will be high, possibly even the full price of the game, in which case the potential "trade-in" value to the seller and the incentives for the retailer become mysterious if not non-existent.
Lastly, there's also the possibility – or likelihood? – that the Xbox One will have to authenticate itself or its games via the Internet periodically, maybe even once a day.
To say that Microsoft has really mucked up the messaging on the new console so far would really be an understatement. It's possible the company will shed some light on the situation in two weeks time at the annual Electronic Entertainment Expo, but the confusion could also be left to fester until the expected holiday-period release of the console. At this point, no one outside Microsoft knows.
The company did issue a statement addressing the confusion, though it did nothing to clear anything up: "Reports about our policies for trade in and resale are inaccurate and incomplete. We will disclose more information in the near future," reads the statement from spokesman Larry "Major Nelson" Hyrb.
Understandably, the share price of GameStop – the world's largest purveyor of used games – took a hit following the Xbox One's reveal, forcing the retailer's president Tony Bartel into defence mode. "All three of the consoles that have launched have now come back and they say, 'I realize the value of the buy-sell-trade model,' and they have built that into their new consoles moving forward," he said during a recent conference call with investors.
"We anticipate that we are going to be able to leverage that, like we leverage it on the consoles today."
Some of that runs counter to what Microsoft appears to be planning, so you have to wonder if GameStop executives are as confused as everyone else.
Over the last several years, used games have become the bogeyman for third-party game developers. GameStop alone posted revenue of $572-million on "pre-owned video game products" in its most recent quarter, which is money that publishers and console makers claim not to see a slice of. Extrapolated on an annual basis, that's billions of dollars they're not getting. No wonder they're mad and trying to think of ways to reclaim some of that coin.
And yet, it's not quite that simple. From the buyer's perspective, $60 or $70 is a lot to shell out for a game. The expenditure is easier to swallow when there's an obvious return waiting at the end. If trading in gets a refund of $20 to $30, suddenly those expensive games are a little more reasonably priced.
There's also an obvious plus for the industry, since consumers are more likely than not to spend that trade-in value on more games. The logic that follows is quite simple: If Microsoft makes trading in less valuable, or even impossible, gamers will buy fewer games. That's not good for anyone.
There's also the competition to consider. In both direct and indirect confirmations, Sony executives have said the upcoming PlayStation 4 will play used games and that the company is "totally opposed" to anything but.
This sets up an intriguing console-war battle ground for the hearts of gamers and publishers.
Whatever system Microsoft comes up with, if it's any more restrictive than the existing one, game makers might favour the Xbox One since it addresses their dislike of used games. On the other hand, rational gamers would be likely to side with the console that is more friendly to them. What if they buy more PlayStation 4 consoles than Xbox One?
Publishers inevitably want to get their products on the platform with the biggest install base, yet going with the more consumer-friendly console will continue the status quo wherein they get nothing for used games. It's a classic Catch 22.
If only publishers, console makers and retailers could sit down and hammer out an agreement in which they all get a piece of the used-game pie without having to come up with draconian technological measures to force it. Such efforts will inevitably result in exactly the sort of thing no one in the industry wants: hacking, piracy and workarounds.
One possible example: if Microsoft tries to kill off used games by forcing account authentication, what's to stop gamers from trading those accounts among themselves? Sure, you may not give out a password that's ultimately linked to your credit card to strangers, but you very well could share it with your close friends.