Microsoft clarified its Xbox One used-game policy in the days leading up to E3, causing quite a stir among gamers. From games not working if the console hasn’t connected to the internet in 24 hours (link) to only being able to pass along a game to one friend (link), to the ability to only resell used games “at participating retailers” (link), the Xbox One manufacturer gave all sorts of fodder for gamers to chew on. Yet it’s the Xbox One game rental policy — or lack thereof — that may be the most intriguing policy of all, if for no other reason than it threatens the very livelihood of companies built on the rental industry, namely GameFly and Redbox.
GameFly, for one, has been running a new ad campaign in which gamers talk about the ability to rent games as they wish, when they wish, for as long as they wish to keep them. Indeed, whether you find yourself trudging through the economic downturn or not, that’s a powerful value proposition for current-gen and next-gen gamers. With today’s MSRPs around $60, subscribing to a game-rental service for Xbox 360 and, presumably, Xbox One, is a great way to play a lot of games for not a lot of cash. Problem is, the Xbox One used-game policy may threaten that severely.
If you review Microsoft’s license policies linked above, the company clearly — but very quickly — states: “Loaning or renting games won’t be available at launch, but we are exploring the possibilities with our partners.” While most gamers have focused on the “loaning” element, it’s the “renting” part that should really be the impetus for discussion, because it could have a larger impact on gamers’ overall budgets. It could also do significant harm to GameFly, Redbox and other companies that have built their business on renting (in Redbox’s case, their movie business still leads the way, but the Xbox One policy wouldn’t exactly bolster their fledgling game-rental side).
To be fair, Microsoft has indicated that it’s still ironing some issues out with partners, undoubtedly including the two key businesses above. The company also said it “may change its policies, terms, products and services to reflect modifications and improvements to our services, feedback from customers and our business partners or changes in our business priorities and business models or for other reasons.” So, the whole concept of not being able to rent an Xbox One game may never actually come to pass by the time the system launches later this year. But, the policy surely presents a slippery slope of being too prescriptive for the industry for the sake of being “visionary.”
So, could the Xbox One’s used-game policy kill GameFly and Redbox? Yes, it could. It certainly wouldn’t do so in the short term, because while Microsoft may have lofty goals for Xbox One sales, the Xbox 360 (and other current-gen systems) will maintain a strong install base for some time, and many of those customers will still want to rent games on their rentals-still-allowed system. As consumers transition to the Xbox One, however, it will be interesting to see how businesses like GameFly and Redbox evolve to meet the new business model. (And yes, interesting to see what Sony says about the PS4 used-game policy in the days and weeks ahead.)
That is, of course, if Microsoft sticks by its guns and retains its current stance on Xbox One game rentals. If you read our Tuesday-morning companion article to this piece (linked here), you’ll see why it could make a whole lot of sense for Microsoft — and third-party game publishers — for them to do so. In which case, hang on tight, GameFly; the road ahead may have some next-gen-sized obstacles in store.
– Jonas Allen