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How Sony and Microsoft can make or break the Gaming Industry

Illustration for article titled How Sony and Microsoft can make or break the Gaming Industry

This upcoming E3 is easily becoming one of the most anticipated shows in recent years. I don't think I can look into the past and say anything notable about any of the previous shows. Mostly because despite my love of gaming I haven't really paid much attention to the show due to the life cycles of the consoles the only thing that is new to me is either a new console update, accessory, or another chapter in some franchise that hardly makes a splash anymore.


Don't get me wrong, E3 gives us something cool every year, however as I grow up it hardly seems so noteworthy. There always seems to be more big news to be seen between shows that the only thing is that you know that E3 will come and at least somebody will surprise you.

Anyway back to the point this E3 will be big. It's like election night for gamers. We know that the industry has some important things at stake.


What's at stake? I'll tell you: the entire home console portion of the industry.

The thing that will change the industry as we know it is Sony and Microsoft's policies on how their future consoles will work with used games. Sony didn't say anything. Microsoft confused everyone.


Disclaimer: It seems like I'm leaving out Nintendo, which is true but their is a good reason. Nintendo maintains a good portion of the industry but they don't control the majority. I'm writing this assuming that Sony and Microsoft have the power to make or break everything. I know assuming things is bad but please don't take my assumptions away, they're all I have.

Let's break this down to smaller levels.

Best Case Scenario For Consumers: No DRM. The console makers would not allow publishers to set restrictive 'logins' or anything that would limit the content that consumers would get like one time activation codes to get multiplayer modes or on disc DLC. This of course is not good for everybody, like the publishers or developer but there will be more on that later.


Worst Case Scenario For Everyone: Sony and Microsoft outright ban used games from their consoles. While not likely, the event of such an policy would have a very destructive effect on the industry. For one companies like Gamefly will almost completely be left out of the next generation due to all of their games technically being "used."


Another company to go down would be Gamestop. They are kept afloat on the promises that there will continue to be games to sell in their stores, but not for long. The advent of digital downloads are certainly the thing that will put them out of business. By banning used games Gamestop will lose what I guesstimate to be 50 percent of its long term potential future sales (assuming that the Best Case Scenario For Consumers would end up with about 50 percent of their used game sales coming from PS4 and XB1). This adds another nail in the Gamestop coffin, which can be avoided altogether by changing they way they operate but that is a whole different article.

I'm tempted to also call this the Best Case Scenario For Developers/Publishers, but that is not the case. The publishers and developers would probably benefit the most from this scenario. Since they already don't make any money from used games sales this would help them push the market into adopting a new game only policy that benefits them with more new game sales. However this hurts the consumer because it forces us to buy higher priced games. With more higher priced games consumers will buy less and then the publishers and developers will suffer more from dropping sales overall. A drop in games sales means a drop in console sales hurting Sony and Microsoft.


Of course this could turn into the Best Case Scenario For Nintendo.


With things falling down for Sony and Microsoft, Nintendo can come right in and sweep up the competition. All they need to do is get the ball rolling on building up a better base of good games and better developer support for the console and they can walk to the top the console industry again.

Another thing that hurts the consumers is the rumor about fees for used games. If Sony and Microsoft place a one time fee on used games then that just adds to the overhead that gamers have to pay for. It can do one of two things: make people pay something like an extra $5-10 or make retailers increase the cost of used games to cover for the cost the fee. This makes creates a kind of inflation on used games, which increases costs, and reduces sales.


Most Likely Scenario: Sony and/or Microsoft work with retailers to provide the developers, publishers and/or the console manufacturer with a cut of sales. Like I mentioned before, forcing a fee on used games could result in higher prices.

How can they do this? One-time use activation codes. If retailers like Best Buy and Gamestop work with the console manufactures to give these codes whenever someone buys a used game at their store. I can see the Gamestop employee saying "Here's your game and one-time activation code" when ever you buy a game. It sucks but it's the only way I can see that it would work out to satisfy the developers and publishers without hurting the consumers (too much).


However if some developers like the cash flow enough they might even ditch Nintendo for not having any deals like this with retailers.

So if Sony and Microsoft actually worked together with the retailers to put together the plan to crush Nintendo and then focus on each other.


However if they don't and only one of them chooses to go the route of going anti used game then things can work against them really quickly. If the anti used game console isn't supported by consumers, while the other is supported I can see that the winners will be Nintendo and the pro used game console.

If you have made it this far either you have rushed to the end or have read all of this. If you are the latter thank you for reading. If you are the former the tl;dr is that economics is fucking hard.


Lastly here is another idea I had.

WTF? Scenario: Sony and Microsoft ban used consoles. Extremely unlikely but can you picture what that clusterfuck would look like?

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