Microsoft Backtracks on Xbox One DRM: Will It Matter?


In a stunning reversal, Microsoft's Interactive Entertainment president Don Mattrick yesterday announced two key changes to Mr. Softy's plans for the next-generation Xbox One gaming console.

Go ahead, unplug
First, after a one-time setup process is complete, an Internet connection will no longer be required to play Xbox One games offline. Now, Mattrick says, "you can take your Xbox One anywhere you want and play your games, just like on Xbox 360."

When Microsoft initially unveiled its new console, frustrated gamers were told their flexibility would be hampered as the device would need to be connected to the Internet at least once every 24 hours for validation purposes.

In fact, in an interview filmed just before Microsoft's E3 2013 press briefing last week, Mattrick responded to gamers' criticisms by bluntly stating, "Fortunately, we have a product for people who aren't able to get some form of connectivity; it's called the Xbox 360. If you have zero access to the Internet, that is an offline device."

Share to your heart's content
Second, Mattrick also stated, "There will be no limitations to using and sharing games. It will work just as it does today on Xbox 360." In other words, you'll still be able to "trade-in, lend, resell, gift, and rent disc-based games just like you do today."

That's a big change from Microsoft's previous assertion dictating gamers would be only able to share their games with up to 10 people through a "family" sharing plan, enabling any of those 10 people to access the shared games digitally through their own Xbox live consoles. What's more, while Microsoft was planning to allow people to gift games to friends, they said each game could only be gifted once, and could only be done for people on your friends list for more than 30 days.

That was a smidge too complicated for many gamers' tastes. On the flip side, however, this also means Xbox One will now require disc-based games to remain in the tray during gameplay, and gamers won't be allowed an avenue for sharing downloaded titles as Microsoft had originally planned.

Who wins?
So who gains the most from these decisions?

First, it should come as no surprise that shares of used-game specialist GameStop climbed more than 6% during Thursday trading. After all, GameStop has struggled the past few years, thanks largely to the rise of mobile and cloud-based gaming devices. As a result, GameStop investors have eagerly awaited a fresh revenue stream from next-gen gaming consoles.

Needless to say, then, Microsoft's original plans had the retailer worried. While Microsoft's change of heart certainly doesn't assure physical media will stick around indefinitely, the move definitely grants GameStop a temporary reprieve.

Of course, Microsoft is also hoping it will be able to win back gamers' affections. And, to be sure, Microsoft's attempt to please gamers is understandable -- if gamers were already annoyed at what they perceived as unpalatable restrictions on content, they were appalled when they learned the console would cost a whopping $499.

Those frustrations boiled over after Sony stepped out last week with its Playstation 4 and undercut the Xbox One's price by a full $100. Even worse, Sony confirmed during the conference its new console would not only fully support used games, but also would not require online check-ins. In Microsoft's defense, however, the Xbox One will come with an integrated new Kinect motion sensor, which typically costs more than $100 itself in addition to the current Xbox 360 platform. The $399 Playstation 4, for its part, will not include Sony's respective "Playstation Eye" accessory.

Even so, when decided to run a seven-day Facebook poll during last week's conference to see which console consumers were more interested in, they ended up closing it after only three days when voters overwhelmingly favored Sony's Playstation 4 by a startling 18 to 1 margin.

But the question remains: Is Microsoft's concession too little, too late? After all, just a few days ago Sony told The Wall Street Journal it was increasing its internal sales projections for the PS4 based on strong pre-order activity, at the same time admitting "demand may well outstrip supply."

But what do you think? With both consoles presumably set to go on sale in time for this year's holiday season, do you think there's still time for Microsoft convince consumers the Xbox One is worth their dollars?

More expert advice from The Motley Fool
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.

The article Microsoft Backtracks on Xbox One DRM: Will It Matter? originally appeared on

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends and Facebook. The Motley Fool owns shares of, Facebook, GameStop, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.