#232 Microsoft’s Double Dipping into their Xbox One Customers

We interrupt this regularly scheduled World of Warcraft blog for an important next generation console post

A few weeks ago Microsoft revealed their next generation game console, the Xbox One at in the form of a big press release event. With promises of better graphics, a new game engines and exclusive games to usher in a new generation of  console games.  The event focused on Television and Netflix, Skype and Fantasy Football apps. It is clear that Microsoft’s plan for the Xbox One is to move the console away from just a gaming device to an all in one media device.

It was so hard to find this picture without big white block text written all over it

It was so hard to find this picture without big white block text written all over it

After the event, rumors and facts started to by the gaming press about some of the unmentioned features and constraints that the Xbox will place on the players, a mandatory once-a-day internet connection, an always on Xbox, stricter DRMs on their games and Microsoft’s vagueness when came to the question of whether or not the Xbox Live service will still have a subscription fee and if the Xbox Live Dashboard will have advertisements.

Out of all of the most startling thing was the discovery of a year old patent Xbox placed on the idea of player interactive advertisement and their plan to add achievements for people watching ads and special television events. It seems that Microsoft wants to dip into both the old and new business model that has emerged from the internet by asking the players to pay for a service and then turning around and selling the consumer’s information to other businesses and companies.

The old internet business model is the one we are most familiar with, a business creates a product or a service and the customer pays for it with money. We see this at the markets and landscaping services offline and music albums and online videogame subscriptions online. You pay money and receive the desired service, end of story. Microsoft follows this model by asking players to pay the Xbox Live service.

But at the beginning of the 2000’s a second business model emerged by providing the people with a free service for you and everyone else to use. This model was popularized by Google, Facebook, Hulu and Twitter. These companies make money is by selling the information we willingly give to them to other businesses and selling ad spaces that we will see the mix of our news feeds and at the beginning of a Youtube video and even using our information to provide targeted brands and advertisements for our eyes to consume.

"Big brother is following you" Funny enough I wrote this before the NDA leak

“Big brother is following you”
Funny enough I wrote this before the NDA leak

It is a tad Orwellian but it gets the money through. Microsoft is trying to utilize this model by pushing the idea of selling interactive television advertisements and achievements that will encourage the player base to watch certain television series and (ESPN) football events and creating interactive television ads.

We live in a world where people expect one business model or the other, either a finished product with no advertisements to buy or a free product with ads and the  expectation that the company would be selling our information.

The Xbox One is trying to do both and burning the candle at both ends, expects us to pay for their service and then selling advertising space and our information to companies. Which I bet will not be well received by the player community and might be a major factor in deciding what console to get this generation.

The only way Microsoft to save themselves from a major player exodus from their service is to make the Xbox Live service free for everyone who buys the Xbox One. Microsoft may make less money with this business decision but they will be able to save face in the eyes of the consumers and videogame community. If they do make this decision I bet it would be one of their major announcement at this year’s E3.

But what do you think, Do you see a problem with Microsoft asking their consumers to pay for Xbox Live and then display ads on the dashboard? and What is your opinion on the patented interactive television ads that MAY be on the Xbox One?

(If you do answer leave a comment on whether or not you currently own an Xbox 360 and if you are planning to buy the Xbox One)


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12 Comments

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12 responses to “#232 Microsoft’s Double Dipping into their Xbox One Customers

  1. I currently own an XBox 360, and I’ve been a very satisfied customer with the XBox consoles (RROD notwithstanding) and XBox Live for a number of years.

    However, because it will require a constant internet connection for the purpose of performing a DRM licensing check every 24 hours, because it places undue restrictions on licensing of purchased games as it relates to renting games, trading games with friends, and buying used games, and because it is not reverse-compatible with XBox 360 and XBox Live Arcade games (thus eliminating consumers’ ability to defray the cost of a new console by trading in their 360 if they want to continue playing 360 & XBLA games), I will not purchase an XBox One console–ever–unless changes are made to the issues I have mentioned.

    • That was a beautiful summery of everything else that is wrong with the Xbox One. I could not have said it any better myself.

      I may seem like a silly question but looking at Microsoft’s console after this year’s E3 did they do anything to change your opinion on their product?

  2. Cadi

    I’ve been “Woo! Team Xbox!” the last two generations, and paying for Live for years. Been very happy with the service overall. Will not be happy if they’re charging and selling you ads though. That’s like how Sky works, and it’s a big cheek. You pay to not get ads, or suffer ads and get things free. MS and others who are tempted to do similar can’t have their cake and eat it.

    It would be okay if they were going the ad route, if instead of getting achievements and gamer points for watching them, they incorporated them into the reward scheme they have at the moment, like a lot of the free to play web games do (“watch this ad and earn in game currency”, “fill in this survey and get extra lives” etc.) – but again, only if Xbox Live was free itself. When you compare it to the competition who are offering free online play, why are we paying for Live otherwise?

    Their stance on pre-owned and lending games seems unnecessarily restrictive. And if it’s seriously as broken wrt backwards compatibility as Matt says, I really don’t see the point in getting one. Just cross my fingers any future Halo games will come out for PC …

    Always online, or as close to it as they get is a major turn-off.

    • So I’m guessing that you are defecting from Team Xbox. What is going to be your console of choice this generation?

      • Cadi

        I’m not sure to be honest, I think I may head towards the uh.. PC side of things for a while ’til the consoles are cheaper ^^; I’ve never had one before, since I had games consoles to play on.

      • PCs are nice and they offer much cheaper games if you are lucky enough to catch a good sale (plus there are always a ton of Indie videogame bundles around the web that are always going on sale)

        Speaking of if you are interested in a PC gaming future, keep an eye out on Valve/Steam’s website, they are setting up their annual summer sale with MASSIVE price cuts on a lot of top shelf videogame titles.

  3. I haven’t owned a VG system since the N360. I considered getting a WiiU but balked after seeing the early reviews, so the streak stayed alive. Based on what I’ve seen, I definitely won’t be breaking that streak with the ONE either. 🙂

    To be fair, what MS seems to be trying to do here isn’t new. You don’t have to look any further than your cable TV bill for an example of how companies try to double dip: You pay an increasingly insane amount of money for your cable subscription, and in return you get scores of channels you will never watch along with the handful you will — except even then, you’ll be actually viewing the programming on those channels about 28% of the time, because every 8-10 minutes there’s a 2+ minute long commercial break. And we’re expected to accept that, without those breaks, our cable bills would go even HIGHER.

    Even Hulu isn’t immune to the allure of this approach. Its paid service gets you access to a deeper archive of shows, but it’s been a while now since they took away the ads — you still see them even if you’re a subscriber, there just aren’t as many.

    I think where we *could* argue MS has taken things too far here is that they’re not exactly double dipping. You buy the ONE. You subscribe to Live. You buy the games. And, it appears, you also watch ads. They’re QUADRUPLE dipping. MS certainly didn’t invent the process of squeezing as much profit as possible out of each consumer — that’s been happening for kabillions of years — but they appear to be awfully intent on seeing just how much juice they can get out of us.

    • That is a very interesting and eye opening perspective of the cable industry’s payment model.

      After seeing both Microsoft and Sony press releases are you still going to buy the Xbox One?

  4. JD Kenada

    Seems a lot of demands for a media console.

    • I agree, it seems to much requirements, restrictions and too much of a monetary investment for an all-in-one media device. I don’t know of anyone (that does not have direct access to their parent’s wallet) who is actually excited for the Xbox One release.

      Which way are you going this gen?

      • JD Kenada

        Don’t know if I’ll touch the next gen. Heck, the only reason I have the “current” generation is because we got a Wii as a wedding gift. lol

  5. Pingback: #243 Blizzard and Microtransactions | Be MOP

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