The Future of Gaming Looks Like the History of Gaming

In the future, we won't buy games on discs and used games will become a thing of the past and you'll have to pay for games again if you get someone else's copy. As a result, GameStop (NYSE: GME  ) will be ruined, and the idea of used games won't even exist this time next year.

As it turns out, we're not big fans of change. Gamers grumbled mightily when Microsoft (NASDAQ: MSFT  ) first unveiled its new Xbox One. Could we buy and trade used games? Could we lend games? What happened if we didn't want to be online all the time? Microsoft was quiet -- or worse. Microsoft executives suggested that if gamers didn't want to be online, they could keep their Xbox 360s and be happy that they had that much.

In stark contrast, when Sony (NYSE: SNE  ) unveiled the details of its PlayStation 4, gamers went nuts. The company wasn't going to worry about digital rights on its first-party games, with third-party titles unlikely to carry any restrictions either. Used games would work just like they currently do. If you want to be online, great. If not, you can still play your games. 

The Xbox backlash was intense and focused. Consumers wanted Microsoft to capitulate in the face of seemingly overwhelming support of the PlayStation features. In a rare case of a huge company listening to its fan base, Microsoft caved in yesterday, and announced that it would follow in the footsteps of Sony.

GameStop lives to fight another day
Just like the used games it sells, GameStop feels like it's been pushed to its limits, tested over and over, and then repacked to be sold on. Microsoft's change of heart is one more scratch buffed out of the GameStop disc. Shares jumped 6% in early trading today, as the market realized that the current game model isn't going anywhere just yet.

If gamers have anything to say about it, the system may never change. And in a statement made to The Penny Arcade Report, Xbox's chief product executive said, "The beauty of our fans, frankly, is that they tell you exactly what they love, they tell you what they don't love, and what we've been doing for the past ten years is to give people more of what they love and less of what they decide they don't want."

The bottom line
At the bottom of all this are two points. First, GameStop isn't going to go anywhere anytime soon. Having made it through the difficult "waiting for an announcement" phase, the company can now coast along until the new systems actually come out. GameStop investors should be ecstatic.

The second highlight of this whole thing is how poorly Microsoft planned the Xbox. While the final product is going to make everyone happy, the company clearly didn't see this coming. In a separate statement, Don Mattrick, president of Microsoft's interactive entertainment business, said:

You told us how much you loved the flexibility you have today with games delivered on disc. The ability to lend, share, and resell these games at your discretion is of incredible importance to you. Also important to you is the freedom to play offline, for any length of time, anywhere in the world. 

Why, in the name of Icarus, would that be a revelation? That's information that the company should have either known intuitively or discovered in early market research. To be forced to backtrack on an announcement in the face of a competitor does not speak to the division's ability to plan ahead.

Luckily for Microsoft investors, the stumble is unlikely to make a meaningful difference in sales once the new machines are actually released. The small amount of embarrassment now has allowed the Xbox to pull back even with the PlayStation. Now all we need to do is wait for the games.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


Read/Post Comments (9) | Recommend This Article (9)

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  • Report this Comment On June 20, 2013, at 10:23 PM, jcar01 wrote:

    Unfortunately, I'm not one to forgive or forget especially from a company that didn't give a damn about their customer base until they saw the bottom fall out in regards to customer support. Microsoft has proven time and time again to not only be unresponsive to their customer base but also to completely ignore them. They've lost me as a customer. I will be purchasing a PS4 for my children and not be looking back.

  • Report this Comment On June 20, 2013, at 10:27 PM, bigL1928 wrote:

    What makes you think that Microsoft is not pulling a P.R. After you are to buy there system, what makes you think they don't start enforcing the rules they wanted to initially?? With enforced online registration and physical games obsolete.

  • Report this Comment On June 20, 2013, at 10:48 PM, alsomeguy wrote:

    I have been around MS since DOS days. So any capitulation on this part by MS is to reduce the hue and cry when the inevitable disappointment in first gen anything built by MS.

  • Report this Comment On June 20, 2013, at 11:12 PM, normgarry wrote:

    GAMING USED TO BE a CUTHROAT INDUSTRY where Sega, Nintendo, NEC and a handful of companies that survived the video game crash of the 80's did their best to advertise as aggressively as possible to convince kids to buy into their console's ecosystem (instead of the rivals).

    "Video Gaming" has now become a bunch of turkeys in suits sitting around a board room table trying to figure out the best package colors, game titles and controller designs to attract kids with ADHD - based on what they've heard from a child psychologist working in your average Public School PSYCHE WARD. They are only interested in showing profits and they turn out substandard product after substandard product hoping to get dummies to buy DLC and squeeze 30% more cash out of them.

    No matter what you think about PS4 or Xbox1, there are very few of us actually paying attention to the pre-release conjecture of these systems. The kids, who are more than likely C- students, are gonna have their parents LINED UP AROUND THE BLOCK to get these systems in time for Christmas.

    Neither system is going to "win" a decisive victory. It's just not like in the old days anymore where one video game company WOULD PUT ANOTHER OUT OF BUSINESS AND SHUTTER ITS DOORS.

    Now video gaming is controlled by Microsoft, Sony and Nintendo. Ouya and OnLive were DEAD ON ARRIVAL.

    Buying a system nowadays is the same as buying a smartphone. APPLE or ANDROID. You are buying into an ECOSYSTEM that isn't gonna let you leave so easily. WEB OS tried to muscle in on Android/Apple's share and got SHUT THE F' DOWN. I actually ended up buying 13 HP TOUCHPADS when they had the fire sale and reselling them on Ebay for profit.

    I miss the good old days where I COULDN"T simply get any game I wanted on either system. Back then EXCLUSIVES were EXCLUSIVES. Ports between Genesis and SNES were NOTHING alike.

    And then there's the PC...

    People argue about whether PS3 or Xbox1 is better, but that's like arguing whether the Democrats are better than the Republicans. EITHER WAY THEY WANT YOUR MONEY and GAMESTOP/BEST BUY/WALMART are there to get the rest.

  • Report this Comment On June 21, 2013, at 12:29 AM, truedats wrote:

    This story goes on and on about how Gamestop is the big winner. but I would imagine an even bigger winner is Gamefly and ability to rent these games out.

  • Report this Comment On June 21, 2013, at 1:20 AM, Petronilus wrote:

    It's really hard to excuse for a large company like Microsoft that they didn't see this coming. Something is rotten in the Microsoft company culture in terms of up-front understanding their own customers and minimize any complacency in internal opinion-making.

  • Report this Comment On June 21, 2013, at 3:12 AM, cso81 wrote:

    I have an Xbox 360. I've been happy with it for the most part even if slightly envious of the ability to go online for free offered by PS3. It's only $60/year... Still... Ever feel like you're being nickel and dimed to death? Once I saw the initial DRM policy and their responses to it they lost me as a customer. Now even if they do reverse their decision on that why should any of us reverse ours? I mean in a practical sense... not just to be vindictive. Specifically; The ps4 has better specs, blue ray tech, better graphics period, faster processor, more + higher quality ram, connect to internet without extra fee, and a hundred bucks less...

  • Report this Comment On June 21, 2013, at 3:34 AM, rkinne01 wrote:

    Microsoft has backed down, but is this change permanent? Who is to say that they won't "flip the switch" and reactivate these so called features at some point? If key developers demand this DRM turned back on MS would do it in a minute.

  • Report this Comment On June 21, 2013, at 7:05 AM, creech74 wrote:

    Microsoft DID NOT listen to their fan base when it came to making this change. What they saw was the abysmal pre-orders they are getting for this thing and had to do something about it. It had nothing at all to do with their "fan base", it was all about money.

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