After an introduction of their new gaming console at this year’s Electronic Entertainment Expo was — by the most gentle of terms — flawed, Microsoft has taken a black eye and a near-knockout in this opening round between Microsoft’s Xbox One and Sony’s Playstation 4.
Many privacy advocates feel that Microsoft’s heavy-handed attempts with its yet-to-be released Xbox One towards digital rights management is overkill. In an attempt to differentiate itself from long-time market competitor Sony and its upcoming Playstation 4, Microsoft may have introduced features and technologies that challenges both the privacy rights and rights of ownership for potential buyers.
More damningly, Microsoft may have introduced these features in order to correct a perceived “slight” in the way secondhand games are bought and sold.
Privacy issues
Microsoft announced a “digital-friendly” approach to game-playing with the new Xbox One, which was, for the most part, panned. The Xbox One will download the actual game to the player’s console, with the disc only being the downloading program. In practical terms, the player will only be “licensing” the game, instead of “owning” it — which would make resell impossible. The game can be shared once by a friend who has been on the original owner’s friend list for more than 30 days, and the system must be constantly online for at least once every 24 hours for server authentication.
“This is a big change, consumers don’t always love change, and there’s a lot of education we have to provide to make sure that people understand,” Microsoft Xbox Chief Marketing and Strategy Officer Yusuf Mehdi said in defense of his company’s policies. “We’re trying to do something pretty big in terms of moving the industry forward for console gaming into the digital world. We believe the digital world is the future, and we believe digital is better.”
For privacy advocates, the new format offered a host of problems and concerns. First, the persistent online requirement punishes those with intermittent Internet access, such as shared Wi-Fi connections, DSL connections, cable connections in heavy urban areas and satellite Internet buyers. It also cuts off use for those who do not have access to an Internet connection, such as deployed soldiers, ship-based sailors, those in remote locales and prisoners.
In addition, the Kinect sensor that comes with the unit can be used for surveillance, as the sensor must be connected to the unit for the system to work and the system would be persistently online. Microsoft patents that have surfaced — such as a digital rights management system that detects the number of viewers in a room and software that awards achievements for watching television programs and advertisements — reveal a potential for abuse. In addition, the always-on microphone presents the possibility of the unit being used as an eavesdropping device. As Microsoft has already released the software development kit for the original Kinect sensor, it is not unreasonable to think — even if Microsoft honors its promise to not use Kinect data inappropriately — a hacker could access the Microsoft network and upload end-user data.
“No privacy policy can stop a hacker from breaking into things,” said Jennifer Rode, an assistant professor at Drexel University who specializes in human computer interaction. “If it’s being processed on the cloud, it’s liable to be grabbed.”
An example provided by Rode was of bed sensors introduced into an eldercare home. The sensors were designed to detect movement to allow medical assistance to be called in the case of incapacitation. It turned out, however, that the sensors were used to detect when the elderly were having sex.
“This is another input sensor,” she said about the Xbox One’s Kinect. “I’m always concerned about the effects of an unknown sensor.”
Officials from Australia and Germany have raised concerns and suspicions about the Xbox One’s sensor. “The Xbox [One] registered all sorts of personal information about me,” said Peter Schaar, Germany’s federal commissioner for data protection and freedom of information. “Reaction rates, my learning or emotional states. You are then processed on a remote server and possibly even to third parties. Whether it be deleted ever, the person concerned cannot influence.”
“We’re not exactly sure what level of information [Kinect] is providing, but these sort of machines will often send analytical data, performance data back to Microsoft HQ in order for the service to be improved in the future,” said Tim Vines, director of Civil Liberties Australia. “That could include the camera trying to guess how many people are in a room, trying to recognise shapes in order to distinguish between a male and a female, between children, adults and teenagers.”
“If people want to have it in their living rooms, and if Microsoft want people to buy it, then I think they have an obligation to be honest about what information’s being collected and how it’s going to be used.”
Second, the repeated online checks are, in fact, forcing players to attest that the console is where it was at installation, unmodified. Strong concerns against illegal copies of software and the possible copying of downloaded games have forced Microsoft to strengthen its copy protection system, first introduced in the Xbox 360. This is seen as a grave invasion of privacy and is denying the end-user ownership of both the system and the games the system plays.
Finally, the proposed system of online checks and game verification assumes that the XBox One servers will run in perpetuity. When the next generation system emerges and Microsoft stops supporting Xbox One, that’s it. The system becomes unplayable and the gamer’s investment is lost.
In response to all of these criticisms, Xbox executive Don Mattrick offered a simple response: buy a Xbox 360. “Some of the advantages that you get, of having a box that is designed to use an online state, so, that, uh, to me is the future-proof choice, and I think people could have arguably gone the other way if we didn’t do it and fortunately we have a product for people who aren’t able to get some form of connectivity, it’s called Xbox 360,” Mattrick told GameTrailers.
“Well, if you have zero access to the internet, that is an offline device, I mean, seriously, when I read the blogs, and thought about who’s really the most impacted, there was a person who said ‘hey, I’m on a nuclear sub,’ and I don’t even know what it means to be on a nuclear sub but I’ve gotta imagine it’s not easy to get an internet connection,” Mattrick continued, in an attempt to clarify his earlier point.
The Microsoft plan
In this third take on its popular Xbox brand, Microsoft attempted to slay a demon that has plagued the company since the introduction of the original Xbox.
The video games industry is a $58 billion industry. The major players — Microsoft, Sony and Nintendo — invest massive amounts of capital and manpower toward winning dominance in this market. In doing so, each of these producers created a high-performance computer-based gaming console at-cost or at a steep loss per unit. These companies make up theses losses through sales of the games for these consoles — most selling at upward of $70 new.
Many gamers feel that the high price of a new game is not worth it. Used games stores — such as GameStop — give gamers a chance to trade and buy used games for discounts of 50 percent or greater. Other gamers have taken to trading games person-to-person, or buying and selling games online at auction sites like eBay.
Doing this cuts the producers and the developers out of the loop. No part of the proceeds from used game purchases go back to the developers or the producers, diminishing any profit they would get if the player had to buy the game new. Many developers, such as EA, developed techniques to punish used game purchases, such as single-use registrations for online content access. However, this hasn’t stopped gamers from trying to find ways to avoid the steep price of buying a new game.
“In a literal way, when you purchase a game used, you are not a customer of theirs,” Penny Arcade’s Jerry Holkins wrote in 2010. “If I am purchasing games in order to reward their creators, and to ensure that more of these ingenious contraptions are produced, I honestly can’t figure out how buying a used game was any better than piracy. From the the perspective of a developer, they are almost certainly synonymous.”
The realities of banning used games sales
In all, Microsoft has a long way to go toward convincing the world that Xbox One is better than the Playstation 4 — which, despite the lack of any major details or specifications, has scored major points with critics for simply being what the Xbox One is not. Critical analysis of Microsoft’s plan to phase out game reselling shows that it would ultimately come as a cost to the industry. A recent study by marketing professors Masakazu Ishihara of the New York University Stern School of Business and Andrew Ching of the University of Toronto’s Rotman School of Management — entitled “Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games” — showed that the videogame industry cannot maintain a price point for new games as high as it is today with a means to allow gamers to sell their own games.
Simply put, gamers get the money to buy new games by selling old games.
“We find that the optimal price would be on average about 33% lower than the current price level, if the used game market were eliminated,” said Ishihara in an email to Wired. “So roughly speaking, in the U.S., game prices should go down to about $40.”
“The reduction in price is partly driven by the fact that if the used game market were eliminated, gamers would no longer be able to sell their games and get back some money (so they need to be compensated),” Ishihara concluded.
Reggie Fils-Aime of Nintendo of America offered some cheap advice for developers truly concerned about used games sales: make better games. “We have been very clear. We understand that used games are a way for some consumers to monetize their games. They will buy a game, play it, bring it back to their retailer to get credit for their next purchase,” Fils-Aime said to Polygon. “Certainly, that impacts games that are annualized and candidly also impacts games that are maybe undifferentiated much more than [it] impacts Nintendo content. Why is that? Because the replayability of our content is super strong.”
“The consumer wants to keep playing Mario Kart. The consumer wants to keep playing New Super Mario Bros. They want to keep playing Pikmin,” he added. “So we see that the trade-in frequency on Nintendo content is much less than the industry average — much, much less. So for us, we have been able to step back and say that we are not taking any technological means to impact trade-in, and we are confident that if we build great content, then the consumer will not want to trade in our games.”