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>If Call of Duty 8 retails for $59.99 on the PS4 and $29.99 on the XBO, that suddenly makes the DRM a very appealing tradeoff. If they're both $59.99, Xbox is dead in the water.

Exactly, if MS had been thinking this all along, they could have proved it with a low price game option announced with the DRM. That would have been really appealing to a lot of people.

That doesn't really work. The game is still supposed to be $60 at launch, that's when games make the most money, they really are worth that much (and more) as evidenced by the many people who pay that much for them, even on DRM-laden platforms like Steam.

The point is to let the price fall faster after launch. Xbox can't exactly promise "Our games' prices will fall faster than the other guys" because the market will determine that -- in aggregate they will, but there's a reason Skyrim is still $30 on Steam.

Microsoft wants a world where you have account-locked games tied to disks, because it gives them the benefits of Steam-like DRM but also the game conveniently on a disk to take to a friend's so he doesn't have to download it, and to let the poor schmuck in rural Nebraska with 25 kb/s to play the game some time in the next week.

Honestly, Sony can take the same pricing strategies as Microsoft on their digital downloads -- Microsoft just wants to have more convenient digital downloads, while Sony just wants more convenient disks.

My guess is that long-term Microsoft will prove to be on the right side of history (the success of Steam is evidence). Sony can probably do just fine for now, they can always transition in later generations when the downsides are no longer breaking news stories.

The poor schmuck in rural Nebraska with 25kb service won't be able to play the Xbox One period- MS has already proposed a min speed of 1.5mbps. And if you are in an area (like pretty much most of the US and the majority of the rest of the world) where your service goes down periodically for more than 24 hours, you will be locked out of playing any games while it is offline. Or if MS gets hacked like Sony and their network goes down for an extended period (at least PS3 owners could still play offline!). Or when MS decides to abandon the platform ad turn off the servers... no pulling out your old Xbox One to play some classic games (I still have an old Atari I like to play occasionally!). Or if you have to cancel your Internet for a few months to catch up on the bills or while moving you have to wait a few days to get you Internet turned on- there are so many points of failure in this fiasco. As a (former) Xbox fan and advocate, I won't be going anywhere near this one.

You have elegantly and succinctly described "defective by design".

>of 1.5mbps.

Wow. There's this whole rest of the world that would kill to get that speeds. I'm confused as to why MS would try to alienate basically everyone not in NA, EU with that kind of a minimum requirement. People in Asia and Africa can pay up that kind of money for the console, but there aren't infrastructure to get you that kind of internet speeds in a budget.

There are PS1's being sold until today for people who can't afford the other version. My point is: I doubt XBOX360 will disappear. Got fast internet, crazy TV and can afford it? Get XBOX1. Your internet is really bad, XBOX360 just like always.

AKA: Microsoft does not have a competitive next-gen product for those without good internet connections.

Like Soldiers, 35% of America... and even then, the larger part of Europe won't have servers for the XBox One launch. So even if you do have a good connection in say... Poland or Japan... you can't play XBox One at all.

Are you sure that min. speed isn't just for multiplayer? I don't see why the call-home would know or care how fast your internet is.

You can use a mobile connection to check in, so clearly speed isn't an issue, I'm pretty sure that the 1.5mb min is just for multiplayer gaming

I don't know, my 4G/LTE phone gets vastly superior upload (though expected)/download speeds to my cable connection, far better than any wired internet package I can get.

I remember how Blizzard servers would often lag or go down for maintenance and there would be no LAN option to play SC2 with friends. It sounds good in theory to some people (just be online all the time!), but it's placing blind trust into a third party. I did not buy the SC2 expansion. I literally went back to playing Brood War over LAN with coworkers. (I beat them 1v3)

The thing is I really don't see Sony as being on the "wrong side of history" though since they are still having day-one downloads of all titles. They are just fully supporting both models (traditional discs and one-copy-per-user digital downloads) rather than forcing everyone into one. They are literally doing everything that MS is doing with digital, yet still having discs (and therefore offline play) as an option.

Not only that, they went a step forward and made downloads even more appealing by allowing you to download the minimum possible to play the game, and just do the rest while you play.

Sony will have digital sales too. But that doesn't mean they will neet to put restrictions on Disc Based transactions. If steam selled Disc Based games I very much doubt they would adopt the same model.

> If steam selled Disc Based games I very much doubt they would adopt the same model.

Valve does sell discs for their games, and they're just ways of delivering bits for Steam. The DRM is 100% identical in every way.

So the PS4 is Steam for consoles with offline support. Best of both worlds.

The reality is that nobody cares about the poor schmuck in rural Nebraska.

80% of the US population is urbanized. Most of the ones that aren't still have access to DSL, cable modems, or fixed wireless of at least a few megabits.

Of the remaining population, a lot of them don't want to play video games or can't afford them anyway. Some (probably large) portion of those that are viable gaming customers will simply make do with satellite connections.

The "poor schmuck in rural Nebraska with 25kb/s" market segment is just too small to economically justify catering to.

That isn't actually the reality. For example, if nothing else, it's clear that Sony does care about the poor schmuck in rural Nebraska.

But more generally, why are you only talking about the United States? What you are saying might be true of the US, but plenty of places across the wider world are home to people who play video games but don't have an internet connection. Or have a spotty internet connection. Or have a connection with restrictive data caps (meaning digital download only would be impossible).

Much of the first world is better connected than the US. If you're talking about gamers with both money and poor connections, they're far more likely to be in the US than anywhere else.

South Africa and many countries in Latin America can afford to pay $400 for the console. But they certainly can't count on a >1.5mb/s reliable internet connection.

So yeah, MS screwed the pooch on this one and that will now all be Sony territory.

I'm not going to canvass all Latin American countries, but the median per-capita income for South Africa is about US$500.

Are you unwittingly basing your comment on the standards of the still-privileged White minority, comprising less than 9% of a country of just 53 million?

Racial politics aside, 5 million people is a lot of potential MS customers.

Maybe, but Microsoft/Xbox One was not the relevant subject, Steam was.

Am I the only one who actually read the comment I originally replied to?

By the way, even the top 10% of South African households have an average income of just US$15,000, so the actual potential customer base is still smaller than you think.

Having just arrived back from South Africa from visiting my relatives on vacation, I was shocked to find a few highly computer-literate cousins over there who only had a 3G dongle to provide Internet for their entire homes. Another relative had a bandwidth-capped DSL line that was barely faster than ISDN basic rate. Income was not the issue.

you can get uncapped 4mb/s adsl for under R450pm in soweto and most middleclass suburbs from a multiple ISP.

Plus, as once a poor schmuck in rural Nebraska, we had decent DSL.

As once a poor schmuck in not-even-that-rural Alabama, we never could and still cannot get decent anything there. Best I could come up with when I still lived there and what my mother still uses is mobile internet with a small cap.

You've checked Hughesnet and Exede?

> You've checked Hughesnet

I say this as a former customer... Hughesnet is an absolute joke. Looking past their incompetent installers (who provided me with a major leak in the roof over my kitchen) and their horrible uptime (clouds in the sky = service outage), at it's best the internet service could only be described as painfully slow. Super high latency, constant dropped connections, poor throughput and to top it all off customer service that I'd rate as equivalent to cell phone providers.

Please, do yourself a favor, and stay far away.

The technology has gone through an iteration or two, with the latest coming in the last year. Your judgement may have been valid in the past (though you're providing a far worse perspective than I've heard from anyone else), but if you haven't been a customer for a while, your past experience is not a predictor of current performance.

As for the incompetent installers, they're probably the exact same local contractors working for Dish Network or DirecTV. Results will vary by area.

Did you read the link? The point is that they AREN'T really worth that much. My brother buys his xbox games (I stick with PC/Steam mostly) from gamestop and trades them in within a week or two if the multiplayer isn't exciting.

So, to him, a game is NOT worth 60 bucks. The 60 dollar price point has nothing to do with him. He pays between 30 and 40 max, usually only playing B rated single player games years after the fact.

Adding DRM isn't going to magically increase the value of a game to the customer. That's not how a market works. The market currently has decided that a video game is worth something per person, on average. Let's call that $40 per game (just an example). So, with the DRM, you sell two $60 games for every three $40 games. Still the same $120 except it all goes to you instead of the first sale to you and the next two to Gamestop.

If MS can assume (or predict, or hope, or whatever) that more of their sales will go directly to them, then they have an incentive to drop the price of their copies of the game because they know that a gamer probably has a fixed budget for gaming and they want to maximize their value.

I don't have numbers but I would be interested in seeing what the average price per console game actually paid by a customer is. My hunch is that the DRM isn't expected to increase the overall sales, in fact they might decrease BY DESIGN. But MS doesn't care about overall game sales. They care about 1st sales. So they might get a bigger piece of a smaller pie and still make out in the end.

Sidenote, Steam's success came from no legit competition, better prices (allowable, in part, by their DRM) and great marketing but I agree that Microsoft's strategy is more likely long term.

....all in all, though, it just feels shitty to have something physical in my hand that I can't really sell to someone if I want.

This is price discrimination at work. It's basic economics 101 that monopolists or duopolists (such as Steam in PC games, or Microsoft and Sony in consoles) in a market will price their goods above the actual marginal cost of their goods, thus undersupplying the market. They would like to charge lower prices to some customers -- they are happy to sell to your brother for $30 because it's certainly well above their marginal costs. Unfortunately, it takes an awful lot of market power to be able to charge different prices to different consumers. Otherwise you will just have people arbitraging away all your profits (case in point, the folks who do a thriving business buying Steam games in the US region and trading them to folks in Australia and Germany).

Anyways, long story short, it's really hard to price discriminate in typical markets, because it's both really hard to figure out which of your customers will pay full price, and it's really hard to stop the people who get discounts from reselling to the full price folks.

But, if your market is digital, flash-in-the-pan pop culture items, then you have a market that's pretty much tailor-made for price discrimination. Who will pay $60 for a game? Well, the ones who buy it on launch, or pre-order for nominal bonuses. How do you stop the the people who buy at a discount from selling to those who pay full price? Two ways -- you attach the game via DRM to an account that is inconvenient to transfer, and you only sell the discounted copies 2 years later. Sales are also a good way to do this -- many people who buy games in sales either were waiting for a sale because the price was too expensive, or heard about the game because of the sale and wouldn't have bought the game otherwise.

The current status quo is that all the profit from the $30 customers is going to GameStop. Microsoft would rather it go to themselves and their developers, so they would rather have digital downloads. Not so they can stop games from being sold at $30, just so that they can sell games themselves at that price without killing their market.

We'll see how the story plays out leading up to launch, but Amazon pre-orders for Destiny[1] are currently running $59 (give or take a few $) for all supported platforms (XBox One, XBox 360, PS4, PS3).

[1] http://www.amazon.com/Destiny-Xbox-One/dp/B00CX9T598/

Totally agree that it's a completely different market, a $60 game vs. a $1 game, and anyone comparing digital iPhone and Android downloads to X1 downloads should stop.

I will, however, guarantee we will never see $30 release-day games of the quality of GTA or COD. If anyone was willing to do that, they would have done it on Steam, XBox Live, or Playstation Store already--they all have DRM'd digital downloads, and it would immediately switch all of their users to that distribution platform. If I could buy GTA5 for $60 physical or $30 digital, there's no contest.

If anything, my bet is some of the new games will be $69.99 for X1 and $59.99 for X360, justified by the additional graphics and "extra" content. See DVD vs. Blu-ray.

The entire original post is wishful thinking from an engineer. As an engineer myself, the first thing I ever learned was that management, sales, and marketing aren't just blowing smoke at the public. The point of always on confirmation is to shut down used sales and stop piracy. That's it. There's no noble endeavor to save us from scratched disks. They love scratched disks; it means you have to buy another copy.

CS:GO launched for $15 on Steam.

unfortunatley, CS:GO is not a AAA, high production value game (think far cry 3). It is a multiplayer only game, and i m certain its production costs are vastly lower.

The price doesn't concern me too much.

With Steam I am in control of the hardware. I can build a new, faster, better PC at any time and still play my games.

When Xbox Two comes out and they discontinue production of Xbox One what happens to my games? What happens when the servers are shut down? Are they stuck in the cloud or a computer recycling center someplace? When my Xbox One stops working (I'm sure it will) can I buy a used one on eBay, plug it in and continue to play my games?

At least with my PC I can build a new one if it breaks. With my NES I don't need to rely on a server some where in a data center still operating. Also, I still have more faith in my NES lasting and working longer than any console put out in recent years, including the Xbox One (or any Playstation model) even though it's over 20 years old now.

Your analogy doesn't really make sense. Your Xbox account is similar to a Steam account works on PC/360/One and you control the hardware if your One breaks, buy a new one and authenticate it with your account. All your games would now be accessible.

The problem is that the One isn't backwards compatible with any of the 360 games I already bought and are stored in the cloud, which leads me to believe they'll do the same with the Two.

There's no way any of this will reasonably apply if we stick to this seven year cycle. By 2020, this will all be so obsolete, nobody will care about backward compatibility. Do you care that your PS4 is backward compatible with an abacus?

    Do you care that your PS4 is backward compatible with an abacus?

I find it handy that different iterations of abacuses tend to be cross-compatible. There may occasionally be minor architectural variations, but it usually isn't too difficult to port your abacus drivers.

the plural is abaci :)

So is abacuses.

I was just playing a steam games from 2004... in fact i have games from the 90s on steam. And they still work almost perfectly, on any windows computer.

So personally, I imagine there are plenty of people who care about it.

Some games even more recent than that don't run well on modern versions of Windows. Wine functions better than Windows in these cases, just like ports of old games are often done with DOSBox. It's very easy to emulate the hardware specs needed back then.

Accessible computing power is growing much faster than it has been in the last few decades thanks to networking. In just a few seconds, I can start as many cloud servers as I want and stream data directly to myself. I can easily run emulators of every past or present video game console right now on a phone. Sony is vocal about moving their infrastructure to the cloud as well.

This next generation is running on traditional AMD processors, and by 2020, I'm sure that emulating the correct environment for their software will not be a problem. Whether you stream your data from Sony or yourself, accessing it and your games will not be a problem. The console itself will eventually be just a DRM device to get you to the servers. The power or compatibility of the machine means very little in that case.

People like you have accepted the fact that they don't own anything they buy. If you are happy to buy a game today, and not being able to play it in a few years because the editor/console manufacturer have decided so, then good for you. On my side, I just want to enjoy what I bought, for as long as I can, and in 2020, I will for sure play 2013 games.

I actually just finished playing Paper Mario again. So yeah, old games matter to me.

Oh for fuck's sake the 360 was a PowerPC arch, and the new Xbox is x86. This is so dumb.

You know how PS3 used to support old games? It had the old Emotion Engine (PS2 cpu) built directly into their system--it was a turducken of processing.

"wah wah wah i cant run my games from a different processor architecture wah wah wah" this is dumb anyone thinking this is dumb

EDIT: Less insulting.

You should get a PR job at Microsoft. I'm sure this line of argument would help convince people.

They seem to be getting along quite well without my wit and charm. :|

This particular category of complaint is very, very common to people that don't understand the technology that they use past the "push shiny buttan on the ui" level. Anybody who has ever touched native code in their life knows that porting applications from different operating system versions--much less processor families!--is non-trivial. But to gamers, oh no, they need to be able to play an old game that technology has passed by--and yet, they specifically went out and bought a goddamned information appliance instead of an engine of computation that they could own and maintain themselves. They brought this on themselves.

Gamers are always "me me me, i want this, wah wah wah". There is not a single customer demographic I can think of that is less interested in understanding their tools and more vocal about the slightest inconvenience, real or otherwise. The worst of them are the ones that have nothing to do but pass of hatred and vitriol online to other gamers, sometimes even passing it off as "games criticism", like they're fucking Ebert or something.

And honestly, we caused this. We catered to gamers, we made their lives so simple and carefree and priced things so low that they are literally the worst customers on earth.

My friends in the web business? Look at this. Look at what these people have become, and expect the same sort of shitty behavior from your users in five-ten years.

> EDIT: Less insulting.

I can't even imagine what this looked like before the edit.

It was pretty bad, not gonna lie.

What processor architecture is printed on the box? There isn't one. It is irrelevant. Backwards compatibility is a feature; it can be accomplished through a number of means. The Xbox One, as a product, either offers that feature, or it does not. Consumers, possessing the power of the purse, either accept the available features or they do not. The technical details, while very important to the engineers building the system, are irrelevant to the consumer.

> Oh for fuck's sake the 360 was a PowerPC arch, and the new Xbox is x86.

And who's fault is that? The consumers? Microsoft is the one that's being "so dumb". People obviously care about backwards compat. and then they did this stupid bullshit.

> You know how PS3 used to support old games?

Ummm, the right fucking way? You know...by doing what it takes and giving the customers what they obviously fucking want?

Why don't you get your head out of your fucking asshole, asshole?

Where Microsoft and Valve differ is that, while Valve's Steam service is known for its quality of service, Microsoft is known for shutting products down whenever they decide they're no longer in the interest of the company. Oh, right, and without any PR or customer service to quell concerns (see: Kin, Zune, Silverlight, Microsoft Broadband Networking).

I don't see how the possibility of a revenue stream they have never depended on is going to encourage to decrease the price. I predict they will just take advantage of people's willingness to pay $60 and collect on it.

I dunno if price is really the issue. People pay much more for downloads of desktop software and at equal prices with the physical counterparts. You rarely see anyone arguing that they should be able to resell Photoshop or Word.

Those kind of apps don't have the same purchase cycle as entertainment items like games, movies or books. They don't grow less valuable the more hours you spend using them (in fact, they generally become more valuable the more you've invested in learning them.)

Folks either want to rent entertainment , or buy it knowing they can resell it, because they know that the act of consumption will devalue that item for them but it will retain greater value for others who have not yet consumed its entertainment.

Why disc ? The problem is downloading 50 gb a game is pretty impossible for most..