Guest Column: Josh Allen on Microsoft’s Puzzling Moves.

(Note: As I recover from health issues, I’ve asked some of my gaming friends to contribute guest columns on things that interest them. This column comes from Josh Allen of GameNikki (in Exile), who is my usual partner on the monthly column Free-Fire Fandemonium.)
In the post-crash era of video games, gamers (or their parents) have had a handful of “Holy Grail” dreams; with recent announcements, Microsoft appear to be taking direct aim at two of those: the ability to play games with friends on other platforms, and not having to buy a whole new console every five (or seven, or ten) years. On paper, both of those sound like great ideas. In practice, they’re perhaps a little more problematic. Let me tackle them in reverse order.
Some (many?) of you will be old enough to remember Sega’s grab at the same brass ring with 1995’s 32X. The idea was that those who weren’t ready to pay full price to upgrade to Saturn could still piggyback their way into the 32-bit generation and enjoy 32-bit games for a fraction of the cost. Here’s the problem: peripherals do two things, and only one of them really really well: they split the market, and they increase resource costs for developers.
That’s a lesson Microsoft should, in theory, have learned with the transition from Xbox to Xbox 360; the original Xbox had an 8 GB hard drive in every unit sold. That kind of predictability makes for stability for developers: they know that every unit sold sports the same internal specifications, which minimizes the number of configurations QA has to test during certification. That, offhand, is the reason why PC games are sometimes buggy messes. When Microsoft launched the Xbox 360, they (inexplicably) chose to split the market: the “Premium” unit had a 20 GB hard drive, while the “Core” had nothing. The result? Developers had to program for the lowest common denominator; designing their games to take advantage of the hard drive would potentially lock out part of the market which might not be keen on spending $100 on a hard drive and $60 on the game. With a strategy like that, some users pay less up front, but everybody loses in the long run.
When Microsoft announced that Xbox One would once again include a hard drive as standard equipment in every unit sold, one might have been forgiven for jumping to the conclusion that they had learned that lesson. So why the shift from a traditional 5-10 year hardware release cycle to modular upgrades? Leaving aside the question of how those upgrades are going to work on a console that doesn’t even allow the end user to upgrade the internal hard drive without voiding the warranty, that’s a dangerous split of the market. How many upgrades will be available? What sort of upgrades? Are we talking video card, main processor, storage, RAM, something else? All of the above? Will developers find themselves in the unenviable position of developing an Xbox One game that someone with just the base unit can play just as easily (if not as prettily) as someone who has purchased all the modular upgrades? In the 32X comparison, it’s worth noting that Sega released brand new hardware alongside the 32X and developers largely spurned the modular upgrade in favor of the shiny new Saturn, choosing to consolidate their resources and focus on a single market rather attempting to capture both nascent market share and a fraction of a previously existing market. Microsoft, ostensibly, won’t make that mistake by releasing an Xbox Two (or Four or whatever), but they’re still setting up a scenario where some users might have RAM upgrades, some might have video upgrades, some might have both and some might have neither. When that happens, developers can try to be all things to all people; they can go pretty and focus on one segment of the market to the exclusion of the rest (and raise prices on the game to compensate); or they can stick with what works. The danger for Microsoft is that if developers choose the path of least resistance and those who upgrade share negative word of mouth because the money feels wasted, they aren’t going to sell more widgets. What then? New hardware to try to get the market excited again, leaving those tech adopters feeling burned?
So there’s the first issue. It’s easy to make the 32Xbox joke (I’m pretty sure everybody already has, before I ever got to it), but the reality is that the only company that’s done a halfway decent job of convincing the market to embrace a peripheral is Nintendo, and they do that by partnering said peripherals with proprietary software. Microsoft…doesn’t much do software for Xbox 360 anymore. Bungie has escaped their orbit, Lionhead is getting shut down, and they eschewed their sports division to woo EA into joining Xbox Live a decade ago. What do they have to make those modular upgrades look more appealing, Nintendo-style?
Issue the second: platform agnosticism. That dream has come in a couple different flavors over the years. Parents have dreamed of one box that would play everything so their kids wouldn’t nag them for the next thing or for the “other” game system. Of course, such a system would essentially neuter the sweet sweet royalty setup that the hardware manufacturers have going, and so that’s a pipe dream. The other flavor is more of a technical challenge than a “convince companies to share the money” challenge: users on one platform being able to play with users on another platform.”
We’ve seen console-to-PC connectivity before; the Dreamcast used its weird, neutered flavor of Windows and the GameSpy multiplayer software to manage that with a few games. I believe SOE has done that with PlanetFall and DC Universe Online, as well. What we haven’t seen has been console-to-other-console connectivity. Xbox Live was a closed architecture for security reasons, but also because there is a real threat: if platform agnosticism happens in the console space, if PS4 users and Xbox One users can play Destiny online together (as an example), then leverage over the user is lost. Someone who might have bought an Xbox One because his friends all have Xbox Ones might buy a PS4 instead, letting Sony reap the royalty rewards from that sold copy of Destiny, never mind the service subscription (PSN versus Xbox Live) and its essentially free money padding the bottom line. The gamble is that by offering that feature, Microsoft hopes to entice people into buying Xbox One because its newly open network architecture could, in theory, offer a freedom that isn’t available elsewhere. They’re betting that they won’t lose software royalties or network subscriptions because the unity they’re seeking between Windows and Xbox One, even if opened to allow PS4 into the ecosystem, will prove attractive. But it also assumes that Sony won’t call that bluff, with their market share lead, and allow developers to do the same thing with PSN.
Both of these decisions are puzzling in their own way. The difference between them is that with modular upgrades, Microsoft seeks a win at the expense of the end user and the developers, while with open network connectivity, the end users and developers may benefit, but Microsoft may not. This is where I would ordinarily offer Microsoft some advice that starts with “Next time…” However, given the decisions made, there may not be a “next time” on the table.