The following is an article posted on forbes.com today.

The battle between the new generation of gaming consoles from Microsoft MSFT -1.13% (MSFT) and Sony (SNE) is on.  Sony won round one when Microsoft tried to impose its highly unpopular restrictions on used game sales and internet connectivity on Xbox One.  Microsoft has tried to neutralize Sony’s advantage by rescinding the restrictions.

Microsoft is counting on what it’s calling “Project Mountain” to help Xbox One beat PS4 from Sony.  Project Mountain is a massive data center to be based in West Des Moines, Iowa.  The Des Moines Register  reports that the Iowa Economic Development Authority Board has approved $20 million in tax credits for Project Mountain.  Microsoft will initially invest $700 million in Project Mountain and later on push it to $1 billion.  Christian Belady of Microsoft said, “The expansion supports the growing demand for Microsoft’s cloud services.” The project represents “our latest in efficient data center thinking.”

Microsoft had earlier said that Xbox One would be supported by more than 300,000 cloud servers.  Now we know that these cloud servers are part of Project Mountain.

Parts of Microsoft’s strategy can be gleaned by an interview with Matt Booty, General Manager of Redmond Game Studios, published in Ars Technica.  Booty said, “Things that I would call latency-sensitive would be reactions to animations in a shooter, reactions to hits and shots in a racing game, reactions to collisions. Those things you need to have happen immediately and on frame and in sync with your controller. There are some things in a video game world, though, that don’t necessarily need to be updated every frame or don’t change that much in reaction to what’s going on.”

There is an obvious question about such heavy dependence on cloud servers in gaming because traditionally cloud servers have produced a lag.  Gamers certainly do not want a lag.

Part of the controversy surrounding Xbox One was the requirement for Xbox One to connect to the internet at least once a day.  Now Microsoft has rescinded that requirement but the open question is how well will the games work on Xbox One if there is no internet connection in view of the heavy dependence  of Xbox One on cloud?  What will happen if the internet connection is slow?  Will gamers with a slow connection get a lousy experience?

Sony did a masterful job of attacking Microsoft at E3 Conference in Los Angeles when Microsoft stumbled on digital right management (DRM) requirements for Xbox One.  It is yet to be seen if Sony PS4 can capitalize on obvious potential issues on Xbox One due to heavy cloud reliance.

Sony has purchased Gaikai, a cloud gaming service, for $380 million. It is not clear how Sony plans to use Gaikai with PS4.

In terms of movement in stocks of Sony and Microsoft, in the medium-term the battle between Xbox One and PS4 will have some impact.  In the short-term, Microsoft stock will be driven by the speculation of Steve Ballmerengineering a restructuring.  Short-term movements in Sony stocks will be dictated by the exchange rate between the U. S. dollar and the Japanese yen as well as speculation related to activist investor Dan Loeb’s proposal to restructure Sony.

GameStop GME -1.86% (GME) stock, the king of used game sales, has benefited by Microsoft giving into the gamers’ demands of mostly unrestricted used game sales. As Xbox One’s heavy reliance on cloud gets highlighted, it will create some conviction on the part of those who are short GameStop stock about holes in the long-term story of GameStop.  Traditionally GameStop has driven much of its revenues from its retail stores buying and selling games.  As a result, the expected short squeeze in GameStop stock may not materialize.  As of May 31, 2013, 34.90 million shares of GameStop were sold short; float is only 114.97 million and the short ratio is 8.70.

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HFFL: Hmm, I should hope that 300,000 servers is enough to fill the need of games being played…

Okay so last week I asked for help regarding business who have partnered with 343 in the past. Now I’m moving on to phase two of this project. This is the development phase. I should hopefully finish this within the week, then it’s on to phase three, the “pitch.”

From there it will be in 343’s hands. For now I can’t go into further detail. Believe me, it bugs me that I can’t tell you all just yet.However, when/if I can, I will let you know as is early as possible.

Here’s a thought folks and hear me out….

With Microsoft’s reversal on the DRM policy for the XBOX One, what if they considered making anything that isn’t CAMPAIGN in their exclusive titles DLC?

For instance, imagine the next Halo game being campaign only. Then to play multiplayer you have to BUY that separately as DLC.

I can see this as a way for developers (not just MS, but Sony and 3rd parties) making more money. Want to buy the game, sure, you get CAMPAIGN ONLY. Want those multiplayer experiences though, you have to pay EXTRA for it. And of course don’t expect games to become cheaper due to that. Both MS and Sony know we consumers are now used to the $60 per game pricepoint, so that will stay.

So what would this mean? Well, those who buy games only for campaign would still have that. But those of us (and I’d say it’s the majority of gamers) who buy for multiplayer/matchmaking) we’d have to shell out more money. Since this can ONLY be sold as new, places like Gamestop wouldn’t be able to undercut the developers. Gamestop would still get money from initial sales of games and a little bit from resale, but the larger portion would go to the developers. Even if Gamestop were to sell CODES for multiplayer in games, it’s still that initial sale in a sense. So again, the devs would get more money.

Would this piss we gamers off? You bet. However if the big guns like MS and Sony both adopted this business model together, then we’d have no choice on consoles (yes PC, but I’m not talking about that…).

To take this a step further, let’s say multiplayer becomes a one-time DLC fee, say $30. What would stop MS and Sony eventually going to a pay PER play for multiplayer? Nothing super expensive, say 25 cents US per hour. Doesn’t sound like much, but when you consider the MANY hours people put into multiplayer that would really add up over time.

Whew, maybe I shouldn’t have thought out loud on this. I hope MS/Sony doesn’t read this article…

-Sal

Okay, I think you all know how I felt about this. However, given that I did a podcast with Podtacular last night to discuss this, I agreed that there could be a compromise to allowing DRM on the XBOX One.

Having said that one of the features that the host “Dust Storm” and the other guest “Drax” were excited about and let me know what it meant turns out to be something of a farce. Not that those fellows were lying, but rather their interpretation of what “Family Sharing” was to be.

In a blog post from a Microsoft employee, the employee explains how Family Sharing was going to work. From having talked with several friends over XBOX Live about this, those friends thought it was a way to share your whole game library with up to 10 people. While that is true…it is only to a point. Most of my friends thought this meant you could share those games “forever.” That is NOT the case.

The following is the statement in which the Microsoft employee talks about what Family Sharing was going to be. I’ve underlined the KEY sentences so you can see where this was going to go wrong. In the case of other color text, that’s me making a comment within the following paragraph)

First is family sharing, this feature is near and dear to me and I truly felt it would have helped the industry grow and make both gamers and developers happy. 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. There was never any catch to that, they didn’t have to share the same billing address or physical address it could be anyone. 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 . This allowed the person to play the game, get familiar with it then make a purchase if they wanted to. When the time limit was up they would automatically be prompted to the Marketplace so that they may order it if liked the game. (See folks, this was NEVER going to be about completely sharing games with your family for good, essentially sharing purchases…Your family was going to have to BUY the game past the demo mode!!!)

HFFL: See, Microsoft was STILL trying to sell you on something without giving the full details. Now this employee who is heartbroken has let slip another detail that was MISLEADING the general public. You want evidence of that? Go listne to the podcast I did last night. You’ll hear both Dust Storm and Drax talk about sharing their games via Family Sharing. Drax in particular about buying a game and sharing it with a friend to play multiplayer. At no point did he think this was going to be on a limited basis. Now I do not make that comment to call him out. Rather, it’s to show the underpinning of Microsoft’s PR nightmare and show how they were hiding facts. By only sharing HALF the story, they had hoped to get gamers excited about the new DRM policy. By the time the truth would have been leaked, I’m pretty sure MS was banking on many of those who pre-ordered would simply continue on since they had already gone through the motion of pre-ordering.

The employee goes on to talk about another feature not talked about. Social Media within the XBOX One. No, I’m not talking Facebook or Twitter, though the employee states those options were still within the XBOX One. Rather a social media aspect that was being built right into the XBOX. See, THIS is the kind of thing I and I’m sure many other gamers would have liked to have known. Is it that it wasn’t ready to show at the reveal or E3? Fine, you can still talk about the feature. Is it that it wasn’t going to be ready for the XBOX One day one launch? No worries, let us know that it will be available after launch and a relative time as to when it would have been implemented. Personally, I don’t see a reason why THIS still can’t be instituted into the XBOX. If they don’t have that available, to me it shows that in a way, this is MS “punishing” the community by voting down it’s DRM policy.

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Do I feel sorry for Microsoft? No. They make MAJOR scratch, money dinero, bank, greenbacks. Am I concerned for the small time developer? In part yes. But I’m never going to go back on believing that being able to buy and sell used games is a benefit to the gamer.

This said, I definitely see a rise in DLC/Season passes and the like being instituted into more games. In fact, I can almost see where multiplayer portions of games become additional DLC that you have to pay for instead of being included. Yes, you’ll get the campaign of the game, but if you want that continued experience in the form of multiplayer, you’ll have to pay for that. In this way, the developer would make the money they are losing. Now, that said, are campaign only games worth $60? Some yes, most NO. Would we see the price come down for games then? Hell no. You know the gamign industry and hell any industry for that matter isn’t going to LOWER prices. Especially when they know the consumer is used to paying a certain amount for a product (even if that product becomes LESS than what was sold previously).

-Sal

Okay, so now that the news has hit that Microsoft had done a 180 on their DRM policy for the XBOX One, I’d like to take a look at some of the feedback from the community and talk about what this means for the future or gaming and the XBOX One in particular.

Once again here are the reversals:

Here are some tweets put out by gamers (I’ve kept their identities private so there is no backlash against them); my thoughts on the comments follow:

“I understood the overall vision with Xbox One. Microsoft leaped out of the box. They wanted the future NOW. PS4 played it safe.”
HFFL: Really? So trying to go too far too quickly with tech and then not realizing there would be backlash was a good thing? Sometimes playing it safe is a GOOD thing. You can’t be a yes man to Microsoft.

“Pretty annoyed with the people who are complaining and saying Microsoft looks ‘weak’ for changing their policies. I mean really?”
HFFL: I don’t think it makes MS look weak. It does however show that they can eat humble pie.

“Xbox One Eighty”
HFFL: Best quote of the day!

“Holy shit Microsoft! I did not see that coming. Fair play. Region free makes me hard <3”
HFFL: Okay, if that makes you “hard.”LOL seriously thought, region free is GOOD.

“Wait. Does this mean game library sharing and Xbox Gold sharing goes away completely?? CLARIFY!!!”
HFFL: Yes, it means no library sharing. One of the features now gone with the reversal. I’m okay with this. While convenient, the other restrictions that would have been in place would have made this feature moot for me.

“Aw man, a few of the decent digital initiatives have been scrapped 🙁 That’s sad. I guess the future is too scary for some people.”
HFFL: No, the future isn’t scary. The constant always on creepy Kinect, having to check-in like we’re kids…THAT is what was scary. I’m a frakin’ adult. I do NOT want a gaming console to be watching and waiting for me, nor to I want to be forced to check in with it.

“There are good and bad points but people seem happy so that’s positive. I can wait another 10 years for digital gaming.”
HFFL: So can I. (Because likely I’ll be done with gaming by then. If not, there may eb something even BETTER!

“I’m all in for Kinect. Absolutely love it. But I hope there is another version for those that don’t want it.”
HFFL: Exactly. It’s about CHOICE. Pushing Kinect on people and charging $100 more for the console is still a sticking point with some people.

“I think Xbox just won The Console War. Your move Playstation”
HFFL: Um NO. MS only succeeded in catching up somewhat to Playstation. They’ve still got ground to make up. MS’s rep took a huge hit not only form E3, but the reveal of the XBOX One to begin with.

And this one…
“Used games only hurt the industry. I hope everyone at least acknowledges this. They are cheap, sure, but the devs deserve the money.”
HFFL: OMG, could you be any further up their asses? Really? Case in point, 343/MS made 220 MILLION dollars on Halo 4, plus with all the DLC, they made a lot more. Not everyone can afford $60 games. Some have to wait for sales. Also, think of it like this, for those who wait and get the game at a discount, many of them go on to purchase the DLC too. Whether that be at full price or discount as well, the developers get more money. Last time I checked developers wages were DAMN good. I don’t think they are hurting too much. As for all the recent layoffs at many studios? Well, I think that has more to do with not putting out superior product. Look, not all games are blockbusters. Not all games should cost $60 at launch either, IMO. I think if some start-ups want to really break into gaming, they might do better by selling their games cheaper and getting it into the hands of a broader audience than those with lots of extra spare cash who can buy “trendy” games. Again, statements like the above quoted one grind on me. I’m just not the “Yes-man” type.

And then I found this:
“Video games are no different. It’s just that used sales are easy to blame as opposed to bloated infrastructures & million dollar marketing.”
HFFL: There you go! Yes, that is in part to blame. Some studios just grew TOO big, and in some cases TOO fast, then couldn’t recreate another blockbuster hit game to keep the company going. It’s called BUSINESS folks. If your game is AWESOME, word of mouth, especially with the net, blog, podcast, etc., is going to do you much more good than spending SO much money on marketing pushing an inferior product down people’s throats.

Here’s another good quote:
“I just can’t blame a consumer and what they do with their own property for a company’s troubles when it’s the company who should be re-thinking how they do things to adapt to it. Blame the poor schmo, just hope nobody turns around and looks at the skyscraper our offices are in…”
HFFL: See, this is what I’m saying. The fat cats in the business suites making major bank off of we “lowly” gamers need to understand that without us, THEY are NOTHING.

I’m very glad Microsoft realized the mistake of trying to push too many restrictions on their consumers. Yes, some new features are wiped out due to the changes, but overall the majority of people are happy with this reversal.

For those saying, well, digital distribution could have changed the price of games (cheaper), but the internet messed that up for us too…I have to say BUNK! Do you really think that devs would charge LESS for their games when they know we are already now used to the $60 format for ‘AAA’ titles? Hell no.

Will there be a time and a place for the tech XBOX One? Sure, some of which is still coming with it.

Personally, I’ve come to the feeling that humanity as a whole is moving way to quickly for it’s own good. Maybe that’s just the “old guy” within me talking. I just do not need such sophistications in my gaming console, especially when they came with so many restrictions. I just want to play games when I want, offline or online without having to check in with “BIG BROTHER.” And on the off chance I want to buy a used game for cheap, I as a consumer SHOULD have that option. Playstation gave that to everyone. Now Microsoft sees that taking that option away just wasn’t what the CONSUMER wanted. And it’s THOSE people a corporation needs to pander too. Developers will still keep making games regardless. Maybe now, those developing solely for Microsoft will realize that they either need to go multi-platform OR make such a KICK-ASS game that we as consumers would be at a loss for not buying it when it originally releases.

-Sal

According to several sources Microsoft will cave to the backlash from gamers over the controversial DRM policies they instituted with the XBOX One. Though not yet official, it’s expected that Microsoft will make an announcement later today.

(credit to Beyond Entertainment for the graphic above)

Here are the changes:
• No more always online requirement
• The console no longer has to check in every 24 hours
• All game discs will work on Xbox One as they do on Xbox 360
• An Internet connection is only required when initially setting up the console
• All downloaded games will function the same when online or offline
• No additional restrictions on trading games or loaning discs
• Region locks have been dropped

Folks this is AWESOME news! It shows the power of the people in action. Since revealing the XBOX One, Microsoft has received a ton of criticism over it’s DRM policies. This blogger was one to quickly jump on that criticism too. The DRM policy is AWFUL. Sony was quick to jump on the bandwagon and at E3 just destroyed Microsoft.

If this all is really true and Microsoft does reverse all of this, it’s a powerful statement that we the people can make a giant like Microsoft CHANGE. I really have to wonder WHO thought this all was a good idea? If it was that smug XBOX Pres. well…Microsoft may want to rethink his contract. The bad press they got from the reveal and especially during/after E3 had them not only losing the next gen console war but already LOST.

Maybe with this reversal they can get back on track. Again, if this turns out to be true, I’m back on board with wanting an XBOX One. With two exceptions…DROP THE PRICE. $100 more than PS4? And also, do not require me to have Kinect. Now if this means having two versions of the XBOX One, one with and one without Kinect, then I’m TOTALLY cool with that. I’ll take one without Kinect for $100 less please!

UPDATE It’s official! http://news.xbox.com/2013/06/update

-Sal

Source links:
http://www.whathifi.com/news/microsoft-to-back-track-on-xbox-one-games-drm-and-always-online
http://kotaku.com/microsoft-is-removing-xbox-one-drm-514390310