Xbox 180: Microsoft no Longer Dream the DRM

The announcement that Microsoft are to drop the controversial Xbox One DRM policies that would restrict the renting, sharing or selling-on of Xbox One games, which I blogged about a few days ago, has been met with joy by many gamers. For those gamers with an interest in the legal issues in videogames the announcement was tinged with a little disappointment. We now won’t have a chance to have lots of interesting interesting legal questions discussed in the terms of a popular mass market product.

In this post I’ll set out a few of the lessons learned and issues that I think are still likely to come up in the future:

1. Ownership does matter to the Consumer

IP led industries are keen to find a ways to shape and monetise the way consumers interact with digital media. The success of ‘walled-in’ systems like iTunes and Steam has obviously given content providers hope that the consumer would accept the proliferation of  proprietary systems where the content provider restricts the way in which the consumer interacts with content. With the Xbox One debacle we see, perhaps for the 1st time in the mass market, some real push back from the consumer. Why?

One of the most convincing explanations I’ve seen is from Tom Bramwell, in Eurogamer. He posits that the difference between the consumers general acceptance of ‘walled-in’ systems like iTunes is that they were ‘additive’; the consumer chooses to use the download and cloud-based system because they see the convenience of those systems as being valuable, for them, when compared to the more traditional physical means of access. The key there is choice. As a consumer I can choose between a music download or I can purchase the CD; both have a slightly different offer and I decide which I most value.

Microsoft might be right in that the future is a download-only cloud-based always-on vision, but in their attempt to get there they tried to take away two things that the current consumer values: choice and physical ownership.Maybe the digital native in a large city with fibre broadband and 4G is happy to rely on the cloud, but not all consumers are there yet. I don’t have access to fibre broadband because of where I live and the local 3G service is patchy. I quite like having the content I’ve paid for in media that I can guarantee access to (It is a poetic coincidence that on the day I am composing this post Xbox Live has been down for a period).

I also like and trust in the idea of owning physical things that I have purchased and also having the right to deal with them in the future in the manner of my choosing. The legal niceties of ‘first sale doctrine’ might not be understood by many consumers, but they understand what it means. We never read the EULAs inside the shrink wrap boxes as we probably won’t understand the contents and don’t believe they’ll ever be enforced.I find the legal context interesting, especially the divergent approaches taken in the US, which could be characterised as more industry friendly, and in the EU, which could be characterised as more consumer friendly, but for the gamer in the street all they can see is that Microsoft were trying to take away a right they had in *all* physical things. A right the ordinary consumer was used to and which they valued. It was this removal of value which I believe prompted the backlash.

2. The DRM Web

If the XBox One DRM plan had gone ahead it would have thrown up lots of interesting competition law questions which I was looking forward to talking about. We won’t now have a chance to see how many of these might have come to the fore.

There are clear tying issues in the bundling up of hardware and content into the ‘walled-garden’ that Xbox Live would have become. You could no longer operate the console without access to the service and all the physical games you owned would also become locked in. What would that mean for market definition or would it be an abuse? Once locked in through hardware would the consumer become the customer of a dominant provider?

Another issue would have been the fact that consumers could only trade games through ‘participating retailers’ – how would they be chosen, and on what terms would they be appointed? There would be a range of questions in the EU about the type of vertical restraints Microsoft would be able to put in place to control the network (again the market definition questions are crucial).

Those Days are in the Past

Many of these question will probably not now be answered, unless people begin to ask them of Apple or Valve. We have however seen that the mass market consumer is more traditional than some of the digital content industry had counted upon. Microsoft may only have jumped a little too early, but they have certainly now discovered that they went too far too soon for most of their customers.

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One response to “Xbox 180: Microsoft no Longer Dream the DRM”

  1. Matt Charleton (@equalsMC) says :

    “Because technically…”

    There is a massive gap between the legal realities (and fictions) of digital media and consumer perception. After the original XB1 DRM announcements, I surveyed my friends and none of them understood their rights to the games in their library… and all of them were against the proposed XB1 DRM policy, even if they weren’t sure why.

    The past few weeks have brought to light a lot of issues unbeknownst to the consumer. Now that many have seen behind the the curtain, perhaps fearing what might come in the future, I believe consumers will be much more vocal and reluctant to change.

    At least, everyone can agree that MSFT failed in execution. I agree it is a case of the frog-and-hot-water analogy, which has been used everywhere lately.

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