Xbox One-Eighty: Winning the Battle but Losing the War

Sean Mesler, Facebook friend and writer of GamerHorizon, looked to have the final word in the debate between the original and new Xbox One. A debate argued vigorously through the forums of NeoGaf or Facebook pages to this day, little ground has been made.

One side of the argument is easily stated: Microsoft wasn’t given a chance to explain their plans yet—instead, the historically vocal gamer consumers were too pushy for their own good.

On the other side of the ring, Sean and his camp champion consumer’s rights. They attack the limitations set to the used games policy, all the while being called “childish” or “whiners” by the other group. Name-calling aside, this group was the clear winner of the war, for better or worse.

Mesler poses the question “Did we get it wrong?”

I’m not going to sit here and look at the fairy-tale notion of the Family Plan, or be hopeful about the unknown elements of the policy—instead, I will simply inspect the battleground of consumers’ rights and how the video game community’s short sightedness stunted the future.

THE POLICY

Sean’s detailed look into the history of the policy boiled down to the following:

“The three key details for me were:

1) You can sell your games at ‘participating retailers.’

2) You can only give your disc-based games to ‘people who have been your friends list for 30 days and each game can only be given once.’”

Additionally, there was the feature to take your physical games and download them digitally.

THE CONSUMERS AND THEIR GAMES

consumer_rights

One of the largest sources of conflict arise from people’s misconception about their relationship to the game’s they spent money on. Over the past few years, starting primarily with Steam, we have been moving from an “ownership” to “licensing” system.

If you are a gamer, there is a very likely chance that you don’t own any of the games that you’ve paid for—be it digital or on disc. An uncomfortable though, right? Don’t believe me? Check (for example) Sony’s Software Usage Terms:

4.1. All Software is licensed, not sold, which means you acquire rights to use the Software, as described in these Terms, but you do not acquire ownership of the Software. If you do not comply with these Terms, we can terminate your Software Licence [sic.] which means you will no longer have the right to use the Software.

as well as

7.1. You must not resell either Disc-based Software or Software Downloads, unless expressly authorized [sic.] by us and, if the publisher is another company, additionally by the publisher.

The unfortunate fact of the matter is that we only have a limited right to these games, and the terms prevent us from selling it. While publishers have been historically lenient on this, allowing the continued resale of games through GameStop and other sources, in reality we have no legal right to do it. This supposed “right” to sell games is terminated as soon as Sony, Microsoft, or any other group decides to enforce the term of their contracts.

Therefore, Sean’s notion that Microsoft was breaking legal doctrine by forbidding the resale of games bought by consumers is misguided. We no longer (legally) own any of this software, and have no right to sell the licenses. Do I like it? Hell no. Is it true? Yep. And we all signed onto it with an “I agree” button.

CONTRACTUAL DOOMSDAY AND THE END OF USED GAMES

Gamestop

With no legal right to selling used games, the used games market is a ticking time bomb. At any point, publishers can enact their right to forbid the sale of any of their software—a ban that would hold true through GameStop and online market places.

But lets be specific, what point will used sales end exactly?

Simple: the dawn of the digital future. While many in the gaming circles, including Sean, like to deny the onset of the digital future, the writing is on the walls.

While it may not happen officially within this generation of consoles, there is a strong, growing shift to the digital market place. As the market moves closer and closer to a digital only means of disbursement, the used games industry will dwindle and shrivel up.

If the digital trend continues (and there is no reason to believe it wouldn’t) it is not only possible but likely that the next batch of consoles will be digital only. At that time, the end of “used games” will be de facto—we have never had the ability to sell digital-only leased games.

While Microsoft was making the assertive move towards the digital future, the public is still cold to the idea that they don’t own the property they paid for. Unfortunately, most consumers also don’t know that these are rights they currently don’t have. And this is why we saw the reactionary move that we did from Microsoft; instead of making the radical change they promised with the original Xbox One policies, they chose to simply wait out the inevitable digital future with the likes of Sony. Hell, I’d risk that they even enjoy the notion, it is much more profitable for them and hurtful to the consumer in the long-run.

HOW MICROSOFT TRIED TO PROTECT CONSUMERS’ RIGHTS

Little is known about the original Xbox One policy, and even less is agreed upon by the online community. However, one section that everyone seems to understand is that Microsoft was going to allow resale of used games to select distributors, trading between friends, and the ability to turn your physical CDs into a digital download. In terms of consumer’s digital rights, this is one of the most revolutionary changes to hit the gaming industry. Let’s tackle them one at a time:

The ability to re-sell used games to “select distributors”:

I can already remember the outcry coming from Sean and other members of his party. “How dare they! I have a right to sell my game wherever, whenever, to whoever!” Except, as it stands right now, you don’t. As stated before, games are licensed to us and we have no legal right to re-sell them, transfer them, modify them, etc.

So what was crazy old Microsoft trying to get at? Instead of merely overlooking the “not-to resell” clause of the leasing agreement as Sony and Microsoft have chosen to do over the last generation, they were going to be the first company to institutionalize it. In order to carry out their plan, they would have to change the consumer rights to allow resale of used licenses (even in a limited fashion)—this is a concept unheard of. While we don’t (and will never) know if this was meant to translate to the online marketplace as well, the fact is clear: Microsoft was trying to dole out rights to stop the exclusivity of digital licensing as seen in Sony’s contract.

The ability to trade games digitally with a friend with limitations:

Going hand and hand with the last segment, gamers currently have no legal right to give their games to friends. Every game is merely a license to the individual, which is by no means transferable. Microsoft, in their original Xbox One policy, looked to change this continuing trend of licenses. Under the policy, Microsoft was to allow a singular transfer to a friend under some limitations (e.g. how long person has been your friend, etc).

Bottom line, Microsoft was attempting to create a licensee right to transferring your own license. Nowhere else in the gaming industry is this legally possible—we can’t trade used games on Steam, nor on PlayStation 4. Once again, this is another right that has been robbed from us, as we shouted out against Xbox One.

The ability to transfer a physical license to a digital license:

Another undersold gem of the Xbox One, this policy was going to allow owners of the physical media to download the full game digitally as well. The theory was that people who owned the physical license also held a digital license, but not vice versa.

This seems like an odd policy—what is the point? The option to get both a physical and digital license through buying a physical copy of the disc was an attempt to cement physical media in the ever-shifting industry. With the ability to have both licenses, there would be no reason to not buy physical copies. While the digital future is on the horizon, Microsoft was looking to preserve GameStop and physical media providers everywhere.

SMALL SIDENOTE ON THE 24 HOUR CHECK IN

While this is the least agreeable section, at least in my mind, I can see it as a “necessary evil” attached to the other rights Xbox One was trying to inject. While this may not have been necessary if they went with the all-digital route, Microsoft’s inclusion of physical media most likely made the transition far more technically confusing than it needed to be.

Therefore, to accomplish the tasks Xbox One was looking to set out, it may have simply been a necessary evil to adopt the always online/24 hour check in feature. The topic wasn’t alive long enough to open the dialogue on the matter, but there is evidence that there was a lot more going on behind the scenes than “we just want to check in on you”.

Penny-Arcade-DRM

BATTLE OF CURRENT AND FUTURE CONSUMERS’ RIGHTS

With this stated, it becomes clear: the battle was not about used games, but rather current consumers’ rights versus future consumers’ rights. While we won the battle for today, I think it is easy to say that we lost the war.

The digital future is creeping forward each and every day, and all we won were non-rights. Sure, we can trade back games, we can trade it with friends, and everything is like the old days. But the winds are shifting, and eventually we will see a day where these rights are legally voided or physical media simply isn’t around.

We had the option to invest in the future, to implement a new licensing model that would grant us new rights. Official legal rights to sell back out licenses, to transfer out licenses to others, or to try and cement physical media as a fixture of the industry. But due to the lack of conversation and short sightedness of the topic, we were robbed of the opportunity.

As the digital future looms over us, consumers have less rights than ever. And even the ones that we won are slowly evaporating.


Lou Contaldi is MONG’s Nintendo Specialist and senior editor. He also spends his time habitating a law school. You can follow his incoherent ramblings at Twitter.

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2 thoughts on “Xbox One-Eighty: Winning the Battle but Losing the War”

  1. Sean, replied to you all over the place but let me write it here for everyone to see:

    Short of a European Court decision, we really don’t know how the courts would rule. Contractually, we are the ones in breach. However, the jury is still out on the matter and we haven’t delved the subject yet. And since it hasn’t been ruled on, we can’t say which side “holds more water”.

    If you check the comments and House Reports it is only applicable to “ownership” of copyrighted works–for instance, an owner of a book not having to answer to copyrighters of the book. It is much more “gray” when discussing people buying songs from iTunes.

    The question unanswered is “Whether purchase of digital media by license for an unspecified period of time creates ownership rights subject to the first-sale doctrine?”

    It has only been addressed a few times, mostly in out of state courts, but it will become a large federal question soon enough.

    Also, isn’t there something to be said about the limitations of physical media, though? Already, file sizes are too large to hold on physical media–they act more like partial-activation keys to the necessary mandatory installs.

    Who knows what will step up first, digital or physical media–but both as they stand right now have their limitations.

    Like

  2. Good stuff man. I will repost my comment here:

    The only issues is that what you are proposing hasn’t been contested by law. I guarantee you that should that day come, and a law suit is brought up, the courts will side with the consumer.

    The legalese they use, isn’t protected by the law, and the only real thing is that we can’t do is sell the media on the disc. However, this are simply their rules and have no real legal weight.

    Licensing has been around for a very long time. This is nothing new. If publishers had legal recourse to stop people like me from selling their games, they would have done so. This policy was made for digital and PC, and has been co-opted for console discs/media as a matter of trying to make all games like this, but at the end of the day, law trumps the needs to the publishers. This is why there is the first sale doctrine and it will always be protected by the courts. Regardless of Terms and Agreements.

    I work for a company that uses Terms and Agreements and they are simply there to dissuade customers from doing ridiculous things and protect us from certain liabilities, however, if the customer ever really pushed back on a policy in our T&C that violated their legal rights as a consumer, we wouldn’t be able to contest it.

    Seriously, it’s more of a scare tactic. And it works for the most part because people are either too lazy or too worried to contest it and as of right now, they haven’t needed to. The MOMENT publishers try to restrict how and when and to whom we sell our games to, we will see some serious sh*t.

    Not to mention that all digital is such a pipe dream at this point considering all of the other logistics and factors like ISPs, poor internet infrastructure and the simple fact that movies and music have been digital for the better part of the decade (and more) and we still have physical media.

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