Why Microsoft is killing the second-hand game market

Looking at the bigger picture, in positioning its next Xbox as an always-online device Microsoft is simply following the path of evolution. Game consoles have been online (in a meaningful way) for 15 years, since the launch of Sega’s Dreamcast in 1998. And today it can feel more out of the ordinary to be disconnected from the Internet than it felt to be connected to it once upon a time. When was the last time you used a static (that is, non-portable) PC that wasn’t online? How often is your TV’s set-top box disconnected from the Internet? How many new TVs fail to make a big deal about being online-ready out of the box? To many, exposure to a constantly enabled networked device feels as natural as drawing breath.

What Microsoft ultimately wants to achieve is a bigger share of your online life. It wants you to use its console, not your cable or satellite set-top box, to rent movies. It wants you to bolster your music collection not via iTunes but via Xbox Music. It wants you to pipe TV programming into your living room through its console rather than making use of your new TV’s clunky Smart features.

The more you use its ecosystem, the more accustomed you become to The Xbox Way, and the more inclined you are to dig deeper into its offerings. (And the more opportunity Microsoft has to track your behaviours, giving it an increased amount of profitable opportunities to use its platform to connect you with other companies eager for exposure to your eyeballs.) Microsoft’s Windows 8, Surface and Windows phones all have Xbox Live functionality to varying degrees, and the more the company is able to touch users’ lives in a meaningful way through its network, the more likely users are to spend time, energy and money with its other products and services. Viewed this way, an always-online console simply makes good business sense.

But if Microsoft is so committed to online connectivity with its next Xbox, why does the console have a Blu-ray drive at all? Well, clearly an always-online console doesn’t necessarily mean an always-online console connected to the Internet at speeds of 20Mb/s+. Even though PC owners have long been accustomed to buying all of their games via download services such as Steam, Microsoft knows, through its experience with Xbox Live to date, that a significant proportion of its potential consumers do not have ultra-fast – or even remotely fast – connections. Far preferable to such users would be the option to suck down up to 50GB of data from a Blu-ray disc at a rate of 27MB (216Mb) per second.

Having a Blu-ray drive on board also ticks another box in Microsoft’s campaign to make its next Xbox the ultimate entertainment platform for the home. Despite the rise of streaming media services, the Blu-ray and DVD market isn’t going away in the immediate future, and any measure Microsoft can take in keeping you focused on its hardware and away from others represents sound strategy.

And when it comes to physical discs, let’s not forget about those all-important thirdparty publishers. How could they sell games in profitable special-edition form if the box contained a soundtrack CD, a magnificent art book and an intricately detailed character statuette but no trace of a shimmering game disc to place ceremonially into a drive tray?

Finally, what about backward compatibility with Xbox 360 software? We don’t yet know whether or not Microsoft has such plans, but being able to run all of your existing game discs from the optical drive of a new console would go some way toward appeasing fans feeling burned by what they’re being denied in other respects.

Ultimately, the new Xbox is still at least eight months away from becoming something you can put in your home, and Microsoft may yet rethink elements of its next-generation strategy. Can it hold its nerve in the face of outrage among consumers who’ve caught sight of its plans for second-hand games?

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