Total Pageviews

Saturday, June 22, 2013

Xbox Reversal Won\'t Stop the Inevitable

It seemed like a spectacular flip-flop: Microsoft on Wednesday reversed a couple of controversial policies about how its new Xbox One game console will operate, both of which would probably have slammed the brakes on the used games business.

Gamers shrieked with the fury of a thousand dying aliens out of “Halo” over the Microsoft policies. Players love being able to finish a game, trade it in for credit at a GameStop or another retail store and buy another one to keep feeding their game habits. Game publishers, on the other hand, get hives over used games because they haven't been able to make any money from the resale of secondhand titles.

Microsoft's reversal on Wednesday may quiet some of the criticism it has received in recent weeks. It will no longer require that the Xbox One be plugged into an Internet connection, which, among other things,would have pr evented players from making copies of games and giving or selling game discs to others.

Microsoft previously said that it would allow games publishers to opt out of allowing the resale of Xbox One games and to let them charge fees associated with that process. Now it says it won't impose any restrictions on the resale of games.

The company's reversal has only postponed changes that will most likely result in used games fading away, though.

That's because it's a question of when, not if, the physical discs on which most console games are now delivered go away. Mobile and PC games have already ushered in the era of downloadable games. People who buy games online can't typically resell them because of the licensing restrictions that apply to digital media, just as they can't resell movies they buy on iTunes.

In an important and overlooked development, Microsoft recently showed just how seriously it inten ded to nudge its customers toward the digital downloading of games. The company said digital versions of Xbox One games would be available on the same day that disc-based versions of those same games went on sale.

“I think this discussion about the used games business two or three years from now will be largely irrelevant,” said Evan Wilson, an analyst at Pacific Crest Securities who follows the games business.

In the meantime, Microsoft's change bought some breathing room for GameStop, one of the few mass retailers dedicated to selling games and a company that is seeking to adapt to the digital future through various initiatives. In its most recent quarter, 30.7 percent of its sales and nearly half of its gross profits came from used game products.

On Thursday, the day after Microsoft announced its reversal, GameStop's shares rose 6.25 percent to $40.94.