Tobold's Blog
Friday, June 14, 2013
I wonder what the actual numbers are

Keen is reviewing the PS4 vs. XBox One, and says "Always online, 24-hour check-ins, no used games, etc just don’t bother me. Computer game DRM never seemed to cause any problems for me despite the outcry it gets. My consoles are always connected to the internet anyway, and I rarely ever buy and sell used games. Obviously I’m in the minority on these issues." And that made me stop and wonder whether he actually *is* in the minority. To be more precise, I am not sure that he is in the minority of actual customers in not having a problem with DRM. Somebody who *does* have a problem tends to be far more vocal about it than somebody who doesn't, so just looking at what people say on the internet isn't going to give us actual numbers.

Unfortunately actual numbers are hard to come by. I found different numbers on used games sales, but as they are expressed in terms of money, and a used game costs less than a new game, it is hard to compare used game sales with new game sales to see what percentage of players resells their used games and would thus be bothered by a system that prevents that. It is even harder to find out what percentage of players doesn't have internet at least once every 24 hours.

I do believe there is a large number of people whose reaction is exactly like Keen's: They look at what games are available first, the price difference second, and the DRM issue barely or not at all. I wouldn't be surprised if I read news around Christmas that the XBone is sold out. That is as close as I think we can get to having numbers on how bothered people really are.

The point is, XboxOne cut out someone. Forcing your customers is always a bad habit. Giving options, choices, freedom (as much as you can)... That's a good way to build loyalty among your clients.

I don't care about numbers either. And I don't have any problem with this horrible DRM (I don't trade, I have Internet access full day, etc).

I just don't like their attitude and -on top of that- I did not like the way they trated us (the customers).

This is why I will not be purchasing the new model, despite being a happy 360 owner. That does not mean I will jump on the PS4 happy train: it just means I will stop being a Microsoft customer, at least for gaming where I have the freedom to choose the platform I like more.
To be honest I don't care about a console being always online. In an age where WiFi networks are always left on at home and even most hotels have free internet services I just don't see it as a huge problem. Consoles aren't single player affairs anymore, they're communication tools too just like phones.

Of course, I cannot buy an XBone because I live in Japan and prefer to play games in English. I'm sure that I'll run into regional restrictions just like I did when trying to buy Skyrim on Steam (NA release was a month ahead of Japanese and I had to use a proxy to trick the DRM validator even though the copy of the game was ENGLISH and from a disc).

Nintendo consoles irk me in the same way though. My 3DS is Japanese and I can't play English games on it. Especially annoying now that they've gone through with digital downloads for games and I wouldn't even need to import English titles to play them.
> To be honest I don't care about
> a console being always online

I don't care either but it's a horrible way to treat your customers. Microsoft is not forcing everyone online "because it's cool" or -as they said- because prices will be lower on the long run (for them, maybe, not for us).

They did so because they could cut costs, track and monitor our habits. Even more.

I'm all for the online and virtual stuff, don't get me wrong, but that should be an option, or at least something that adds value and only if you really want it.

The latest Sim City desperately tried to convince us that being online was the only way to achieve a real success: in reality, not only the game is flat/bugged... But the "online" part of it was a huge, epic disaster.

Country restrictions are yet another example that you CAN bypass them, if you want: the new Playstation4 does not have such limits, and that adds a hue value to the already cheaper platform.

Finally, the "wifi is everywhere" is not true at all. Big cities? Sure. Smaller towns? Usually yes. But outside the "big" and "modern" urnanized areas, there are TONS of places where the connection is slow, bad or just not available. I live in Italy (not the 3rd world) and we have ENORMOUS connectivity problems here.
If I remember correctly, you WERE bothered by inability to play SimCity last time... despite you had no problems with internet access.
@ souldrinker (don't drink me)

Fact is, the "online component" and "social aspect" of Sim City is/was complete rubbish for various aspects: badly coded, badly implemented and -basically- useless.

At its core, Sim City lets you build ultra-small towns. And with everyone upset and blaming the company, they started releasing DLC's with ads (see the Nissan parking lot).

At first they stated that part of the code was online to prevent cheating and blah blah blah. Also, they told us that running the game without that code was impossible.

The rest is... history.
I'm not overly bothered by the check in thing to be honest (even if i was going for the XBone - which I'm not, I really doubt it would bother me). What I am bothered by is the corporate - you'll buy it anyway you witless sheep' attitude that MS have displayed when talking about this.

MS communication has been utterly awful on this whole issue. It shows an arrogance and surety that pisses me off far more than the issue of always on internet connection.

Sony are doing a similar deal with publishers being able to set their own DRM restrictions, only without the 24hr check in. So there's not that much difference there.

But Sony have proven to be the more communication savvy, more gamer friendly side of this. At least from a PR point of view. And from a hardware point of view also.
I just don't get how always on DRM doesn't effect everyone.

Your cable modem breaks, you don't have internet for three days while the ISP mails you one. There's a storm and you have power but no internet. Your wife is streaming Netflix, and the college kids next door are torrenting porn, and your connection isn't good enough for the XBox to get authorization. Wouldn't it be nice to be able to play your games to kill the time even in suboptimal situations?

More to the point, why would you buy a product that intentionally hobbles your ability to enjoy it? I just don't see the counterbalancing cool thing that makes even one day of staring in frustration at your XBox because your connection is down or the authorization server is down. Which brings up an interesting point: is MS committing to keeping this server on for all time? What happens in 30 years when the retro gaming nerds want to play Halo 5?

Keen has an MMO blog, he identifies himself as an MMO gamer. The guy is totally unrepresentative of the average person buying these systems. I'm sure there are hundreds of thousands, maybe millions, of customers who really don't care. When you're hoping to sell 75 million XBones, losing even 10 or 20 million sales is enough to definitively lose the console war. Launching a console that requires an always on broadband connection when most of your sales comes from the United States (aka the land of the shit internet connection), is probably not the wisest move.

Can you imagine the bad PR that IS going to happen when thousands of parents buy the XBox cause Lil Timmy wanted it, go home, and find out that their connection isn't good enough to play the game they bought on disc?

Whooo. That's gunna get ugly. Those parents will never forgive MS for ruining Christmas if that server is, say, down because of the massive surge in users that nobody seems to ever be able to cope with.

Or the inevitable stories when Lil Timmy figures out his parents PIN and, now having access to their credit card, proceeds to buy everything in the XBox store and bankrupts his parents. That's also going to happen.

Sorry to spam comments, but one more thing:

This is MS. The company behind the Zune, the RROD, car entertainment systems that have to be patched, but that patch can't be downloaded by any current generation browser, and a calvalcade of other fuckups that we're so used to that people just accept them as part of life. They are the masters of getting a product 95% ready for action.

So I have major problems with all this in a theoretical world where MS pulls all this off without a hitch. In the real world, watching MS chase after the greased pig of their own creation is going to be hilarious.

For real, $500 is a lot of money, at least wait and see. Because I have the tingling sense that the stars have aligned against the XBox.
Why are you "obviously" in a minority? Smack talk and idle threats to boycott products on Web forums doesn't necessarily match up with silent majority punters in the 30 to 45 age range who buy the most games.
I am with Keen, I never buy or sell used games or pirate. So I prefer the XBone style.

People seems to be missing the tradeoff issue. Obviously DRM is always intrusive and lowers sales. The calculus is whether that is more or less than relying on the honesty of the customers. If you sell 90% as many boxes and they generate 120% of the revenue then it is worth it. Bad DRM is Bad - 50%*125% < 100%

So to answer 4c22, the counterbalancing cool thing is I get cheaper/better games. But if I get a very slight inconvenience and the publisher gets say 20% more revenue then I get more games made, more content, or cheaper. (For those who say the publisher may not put the extra $ into the game: turn the argument around: do you think Bobby or EA would spend the same amount on a game if the accountants forecast 20% fewer profits?)

I cynically expect the XBone to sell out regardless of popularity.
I am against the no-trade system of X Box and is the reason why I am not even thinking buy it. In Playstation I often trade games with friends or rend games from video club.

For example, the video club in my neighbor has an offer where you can give 15 euro per month and and rend whatever you like free for all month. Of course you can only have 1 title at any time. It is also have all the new titles multiply times, so finding the top games was never a problem. So with 15 euro a month I could play/test all the playstation games and decide what I want to buy. I could also trade games with friends.

without the above situation, I doubt I would ever buy the PS3
Hagu, that is wildly optimistic.

They aren't going to give you cheaper games because you have less options. It's going to get more expensive. The idea it's going to be cheaper is.... really optimistic. Also quality generally doesn't go up because the company has it's customers by the short hairs. You're expecting them to just voluntarily make less money by charging less or spending more because you gave up your rights to used games. Why do you think MS and EA are going to leave money on the table out of niceness?

I also don't believe they are going to make the games cheaper, as people are *now* happy to pay X while competition from the second hand market and piracy is around. When they eliminate the competition, there is 0 reason to reduce the price.

See also the DRMed ebook pricing, which is at almost the same price as the dead-paper ones.

I also happen to have owned play-for-sure music and Adobe Media Player files, which left me after the respective management decided to axe it with not very much to show for the money. If they would have been priced cheaply, I wouldn't mind, but they charged almost full price for everything, as their Marketing Department believed the crap they spewed forth.
If they wanted to sell more copies and reduce used game sales, they could have lowered prices already! Instead, they got raised.

Nintendo doesn't care about used games because they make games that you mostly keep. It's these companies churning out $70 games that have 6 hours of gameplay that are upset about used games because that's where the game gets churned three or four times in the first month.
To turn the argument around: if everyone (or majority, whatever) is going to be connected to the internet anyway, why is the 24-hour check-in required? Every XBone disc is going to have an Online Pass-esque code that will require you to sign into the Microsoft servers to register the code to your account anyway - it is not as though you could get around that DRM feature somehow. "Living worlds?" Okay... but in every game? I makes no sense. The only thing I can imagine is that they somehow want to make sure the ads they'll pepper the Dashboard with are updated every day.
I'm asking for numbers, and all I get is "I don't like it" responses. Are you really so convinced of being the center of the earth that what you think must automatically be what everybody else thinks? Do you really believe come Christmas there will be millions of unsold XBones everywhere?
Well Tobold, it's not like whatever Microsoft does... it becomes gold. Windows 8 was a huge failure for example, and they tried to sell it as the new Messiah.

Compare to some years ago, the modern customer (young, old, it does not matter) tries to get more info and reads online reviews. I guess there will be less sales than expected.

Consoles flopping because of undesirable features is very common. It's more common than successful consoles, actually.

What nobody has given me is a remotely convincing reason to pick the device that has been hobbled. And I haven't sold a used game since 1998, and hell I don't even play console games. When I talk about this I am putting myself in the position of other people; kids who want to play Madden at the sleepover with their friend, teenagers scraping their disposable income at minimum wage shit jobs, and so on. Even for the mature gamer who can afford all the games he wants I just don't see the attraction of this system to anyone. There's only downside compared to the PS4, if only the possibility that your XBox won't let you play your legally purchased games because a tree fell over.

The hypothetical casual gamer who does not know or care about the features of these consoles--- what exactly is supposed to make him pay $100 more? Halo 5? I would think the general negative buzz+lower price of competitor is going to have a serious negative impact on this oddly ignorant gamer who still is some reason willing to spend $500 on a console sight unseen.

Even if they don't care for themselves, they'll stay away because they'll be afraid the console will flop and they'll be stuck with a useless box. It's why I didn't get a Dreamcast or a 3DO or a Jaguar.
To turn the argument around: if everyone (or majority, whatever) is going to be connected to the internet anyway, why is the 24-hour check-in required? Every XBone disc is going to have an Online Pass-esque code that will require you to sign onto the Microsoft servers to register the code to your account anyway - it is not as though you could get around that DRM feature somehow. "Living worlds?" Okay... but in every game? It makes no sense. The only thing I can imagine is that they somehow want to make sure the ads they'll pepper the Dashboard with are updated every day.

Will they still sell millions of consoles? Sure. SimCity also sold millions of copies. In neither case do the sales automatically make the underlying design decisions a good idea, at least from a consumer surplus angle.

I do not expect game prices to go down; merely that they will cost less for me (but not for pirates and maybe not for used buyers/sellers) than an alternative future without DRM.

My guess is the future is Software as Service; currently you no longer buy licenses for Microsoft Office or Adobe suite, you rent the software. Or Google Office or a host of music services. It finesses a lot of the expectations and abilities to resell/piracy.


I am naively optimistic about cloud computing although I acknowledge we have quite a ways to go.

However, Sony spent $300mm on their cloud gaming acquisition. And Microsoft is pushing cloud.

One could read the above and infer that in a few years as Microsoft gets better at it and developers get more sophisticated and experienced with it, someone with an offline console might have a quarter of the power of someone who is connected. One of the draws of this is that more power and storage can be added to the cloud as Moore's law improves servers, while consoles are pretty fixed for nearly a decade. Once sophisticated games require a constant internet connection, a once-per-24h checkin will not appear as onerous.

One more thing: people seem to be forgetting the 800 lb gorilla in this discussion: Sony's marketing department.

They are powering up right now like the Death Star compiling ads to make sure that the ignorant gamer that MS is counting on will understand exactly why the XBone is the more expensive, less fun option.

They will spend hundreds of millions to make sure everyone understands why the XBone sucks. It will tank, because there is no upside even for Keen and Tobold.

Ad: Insomniac guy tries to play at 2 AM but his ISP is down. XBOX flashes DENIED.

Ad: Guy tries to rent a XBONE game. DENIED.

Ad: Snow day. The internet goes out. XBOX flashes DENIED. Kids go on a rampage. Tagline: Parents--- don't let this happen to you: Get a Playstation, where fun is first, not profits.

Ad: Christmas Day. Kid opens his XBone, he's so excited. He plugs it in. XBox: AUTHENTICATION SERVER DOWN. ACCESS DENIED. Kid bursts into tears. Christmas is ruined! Santa appears with a PS4. Santa reminds the kid that that won't happen with a playstation, then tells teh parent as an aside that it's $100 cheaper than the useless XBONE.

I mean c'mon guys. It's going to be a Texas Chainsaw Massacre-style splatter fest. XBone is doomed.

Well Hagu, in the future when cloud computing is handling the load of the console, you won't need to check in.

What I resent, and why this will fail, is that it is an intentional hobbling of the product. If the XBone was basically an Apple TV streaming games I wouldn't have a problem with that. Technology advances. This, however, is a bald power grab that advantages me not at all. Why anyone would spend more money to get less boggles my mind.
While I don't use consoles I have spent hours getting some of my games with connection based DRM working.

Of the online check DRM games I have Diablo 3 and Starcraft 2 haven't really given my much trouble, but Fable 3 was an absolute mess to get working on PC. I spent hours setting it up and then trying to transfer save games.

I rather object to DRM hostile enough to disallow transfer of saves between accounts.
The XBox 360 had the Red Ring of Death making the console a useless brick for many people. Microsoft still sold 77.2 million of them.

You guys are just talking about your personal anger. I understand that anger. I'm just not convinced that a few angry internet ranters are going to have any impact on Microsoft's sales numbers. You can try to explain away the success of Apple and Steam as much as you want, there is simply no example of any system failing to sell because of restrictive DRM. Even SimCity sold like hotcakes, and that was not just having DRM problems, but also server problems, AND was a shitty game to start with.

Come Christmas many people will see some XBox exclusive game they absolutely want to have and buy that XBone, whatever you say now.
I assume the majority of customers in business and voters in democracie are nit interested in that complicated stuff. They want their games to be fun and their laws to be good for them.

That is what we have a free and critical press for: To protect us from uninformed choices, from falling for propaganda, from walking like lambs to the slaughterhouse.

There are those who don't care that MS puts a microfone and a video camera in their homes, that are always connected and always on. There are those who don't care about PRISM. There are those who just do not want to be bothered with adding one and one.

It is ironic, but covering the "console wars" our press is doing a whole lot better than covering "real" wars...
Oh come on Tobold, an impact doesn't have to be all or nothing. Simcity 4 sold like hotcakes. From some quick googling, in 2007 (its 5th year of release), it sold 300k units, holding its own on top selling PC games lists. Do you believe that Simcity 5 will even be on anybody's radar next year, left alone five?

No one's saying that no one's going to buy an Xbox, but your comments are trying to make it out like we're idiots who are saying such cruft.
It should also be pointed out that the US household broadband penetration rate is only at 68.2%.

Not everyone can get access to the internet, and I don't think people will be willing to bring their Xbox One to the local library just to reactivate their Xbox everyday.
Remember a few months ago when Tomb Raider was branded a failure because it "only" sold 3 million copies? If Microsoft only moves 3 million XBones in the first year, they will also be a failure. By comparison, sales of the XBox 360 sold 7.6 million in it's first year.

Sony showed up a year later with a more expensive console and struggled mightily the first few years. Sure, they sold over a million units, but success in the console biz is measured in tens of millions of units.

You don't need hate to forecast struggles for the first few years of XBone's existence, cold logic will do:

1.) Microsoft has the higher price because they insisted on bundling the Kinect.

2.) They're vision of an "all in one" device is not shared by their core audience.

3.) They underestimated consumers hatred of all things DRM. (If they backed off of the 24 hours and gave a couple of weeks instead, they'd have a pretty good model.)

In contrast the only positive bullet point is a few exclusive games. I'm guessing that will translate into 2 or 3 million sales in the first year. In contrast, Sony will probably sell 6 to 7 million.

I haven't bought/sold a used game for my Xbox 360 in half a decade, and I don't really plan to in the future. I only buy games I really want, and I'd rather my money go to the developer than Gamestop or some other retailer. If I like a game, I want a sequel, and that means helping generate real sales numbers for the publisher so the dev gets a greenlight.

On the PC, I use Steam almost exclusively. I have no problems with it, and love the convenience and ease of using games through Steam over multiple computers. I hate discs these days, and one of the main reasons I'm more likely to start up my PC to game than my Xbox is that I won't have to go digging for discs when I finally decide on what I want to play. Turn the PC on, pick something, go.

However, if the "always on" internet thing really does end up being a requirement, I think that's stupid, because it doesn't provide any benefits (digital distribution of games does) and only provides problems. If my internet goes down, it sucks enough that I can't use online games -- but no games at all?! Ouch.
Well the difference there was that it started out well as the cheaper option with certain strong points (better multiplayer, generally better experience), the customer service was good. Aside from the Blu-ray aspect, the PS3 really was the poorer option, assuming operational consoles. Maybe the reason the PS3 came back from a rather unimpressive start was the RROD.

The mojo for this one is bad. Bad launch+no particular redeeming features+loaded with a bunch of fun for a week technogeek options=not a great future.

The XBone has cut out parents (who just want a cheap low hassle toy for their kids), anyone who likes to stretch their game budget by selling used, anyone who still rents a game, anyone with a bad or nonexistent internet connection, anyone who doesn't really like the kinect watching and listening to everything you do, leaving only nerds who don't mind DRM cause... like... the XBone lets you fuck with your IPad while you play Halo or whatever.

Like I said, if not for Sony's marketing department, the "idiot gamers won't know better" argument might fly.

But Sony does have a marketing department. They'll know by the time they show up to Best Buy.

I seriously doubt that Xbone will survive in happynes for 10+ years.

Will it sell like hotcakes the first year? Sure, it can happen. What about 2015, 2016 and so on?

As Pzychotix pointed out, it's more about the overall impact over the course of the years. In that sense I feel the Xbone will not be a success at all.

I STILL doubt it will sell a LOT during Christmas, only time will tell.
When the always on Kinect, capturing sound/images from your living-room, backfires badly no amount of PR will save Microsoft from an insane amount of lawsuits.

Privacy is over yadda-yadda-yadda but saving your browsing history is one thing. Saving bit and pieces of conversations/images is a totally different ball game.

In any case DRM is really not the issue. The issue is the disregard from consumers and the lack of options. Not a single game will be cheaper and the lemmings with too much money won't even try to consider the market signals they will be sending by accepting less for more.

In any cae I can't hardly wait until Jim Bob and Brenda start getting adds for KY or Leather Whips on their XBone after an exuberant evening on their living room.
Re Sony's marketing department: I remember when the only TV to have was a Sony and they invented a megacategory the Walkman. It was not just marketing, it took a combined failure of technology, business and marketing teams but I do not think of Sony as having a good marketing department. OTOH, Microsoft's advertising is not great either. I hope Sony does well but I would not be surprised if it was in spite of Marketing.

Perhaps there is an assumption on gaming sites that "not catering to the core market" matters more than perhaps Microsoft thinks.

If Microsoft has already sold 77 million XB3600 then Microsoft and Sony have to be hoping to sell over 100 million of these over the next decade.

1) trends and momentum matter, but just how much does an extra million unit sales this Christmas matter? The value of the product will be whether the forecast/sales is for 77 or 100 or 120m lifetime sales, not whether they sell 1 or 3 or 5 this holiday season. There is a tiny but definitely not zero chance that one of these will not have significant sales this holiday season due to software or manufacturing delays. that would be serious but not fatal if one missed.

2) If Microsoft is trying to sell 100,000,000 XB1 over its life, then if every single person who posted on a gaming site this year did not buy a XB1, would it be at all noticeable? Is there bigger competition to getting to 100mm the PS4? or the iPhone and Galaxy?

3) Sony is losing money and the board is getting pressured to spin off the electronics business. Microsoft has 70 billion cash on hand. What if they spent a billion on lining up some game exclusives? I just don't see the president of EA or AB not cashing a $100mm check because they worried it might be bad for gamers and competition.


People buy approaching a half-billion dollars of games from Apple every month. Every single one of them is "hobbled by DRM" A third of the prime time internet traffic is Netflix a service with DRM that requires a decent, full-time internet connection which is far more restrictive than needing a slow connection once every 24 hours.

The numbers I saw reported was that the pre-order ratio was 3:2 in favour of the PS4.

I actually think that is looking pretty good for Microsoft. Nintendo would give their right arm to sell 2 Wii U's for every 3 PS4's sold.

Forum polls seem to show 80%+ favouring the PS4 but that is clearly not reflected in pre-order numbers.

Given that the pre-orders are almost all going to be from the real hardcore gamers who read forums and news sites, it is pretty obvious that a lot of people are saying one thing and doing something else.

The masses out there don't read game sites and are not really picking up on the negative vibes over the Xbox One.

I expect they will look at games like Forza/Halo and consider their investment in Xbox Live (friends etc) and buy loads of Xbox Ones. I wouldn't be at all surprised if the final figure is far better than 3:2.

This is all about publishers. Sony are banking on selling so many units that publishers have to release games on the PS4 because the install base is too high to ignored.

On the other hand MS may have less consoles out there but they will likely sell more new copies as a percentage of their install base - because gamers can't pick up a used copy (zero $$ for the publisher) from a game store.

Even at 3:2 I think publishers would still be keen to give MS exclusives on games/dlc etc and as I say that 3:2 figure is likely an under representation of the Xbox's mass market sales.

MS might suck at PR but I bet their market research figures are on the money. Some consumers will be sacrificed as you can't make omelettes without breaking eggs but they already factored that into the equation. It is harsh but the guy on the nuclear sub simply isn't worth retaining.

I feel the biggest threat to MS is in the attach rates of cross platform games when it comes to my demographic who have pre-ordered both. Now I don't know what percentage of customers own both consoles so I don't know how significant we are. But the PS3 suffered from a poor attach rate - I always bought games like Red Dead Redemption on my Xbox because they had better graphics, resolutions and frame rates than the PS3 versions.

It looks like in this generation that situation will be reversed.

So I believe that most consumers will remain loyal to whatever system they support now and the "floating voters" will opt for the one that the general consensus says is the most powerful. Power will be a bigger factor than DRM.
I'm in the EU and I haven't even heard of anyone pre-ordering a console. Games, yes, but not the actual machines. Almost all of the purchases are done in retail stores.

But then again, even if we wanted to get an XBone (which we don't), we can't because apparently East Europe is not even getting it on launch, with the exception of Russia.

Can you guess what the gamers in those countries will get instead?

Also, not releasing in Asia with the biggest growing gamer demographic? Jesus, it's like they want to hand over the territory to Sony. But then again I guess this is due to the online-connectivity part.
At 3:2, if this gen sells 150 million consoles, the PS4 will sell 90 million, XBox 60 million.

So that's like 12 BILLION in extra Sony sales. It's really hard to believe the scourge of used games, which previously had not stopped the extremely healthy growth of video game sales, will compensate for the PS4 have a customer base 50% larger than the XBone. So that 3:2 ratio bodes extremely ill.

I think the preorders, especially at this stage, represent the hardcore. I'd bet there's nontrivial crossover of people who have preordered both consoles. Expect that ratio to widen once Sony ravages the XBox in advertising, MS starts retracting some of the fancy nonsense features, parents, the budget conscious, and those worried about buying a dead console start sliding towards the PS4.
Sony and MS lose money on consoles sold. At least they will do on the majority they sell. Perhaps the last year or two of the generation they might make a small profit on each unit.

More consoles sold by Sony during the first half of the generation is more money lost by Sony.

They need to sell more new games to claim the royalties and provide incentives for the publishers to support the system.

Will the ratio of new games sold on each system be 3:2 to MS...

This comes down to the question of exactly how many people really buy and sell used games. How significant a factor are used games as a percentage of games sales?

Of course as publishers will take the matter out of Sony's hands and include their own DRM on used games it will likely be win-win for Sony as they sell the most consoles and games.

The losers will be those who thought it mattered which console they bought.
The sell em at a loss thing is a bit of a myth.

If you're amortizing the cost of R&D and setting up the plants, the initial batch does technically generate a loss. But this is true for any business. Your early customers are technically losses because they are paying for your startup expenses. But the XBox360 became mildly profitable after the first year, for example. If the PS4 sells a 20 million more units, the consoles will be more profitable and it will happen faster. So selling less is not an advantage at all, it only extends the time before you make back your startup costs. And of course since the idea is to make your real money on the software, having an installed base with an extra 30 million customers is going to be huge.

Imagine that each unit sold nets the console maker $5. Imagine a game that 10% of the customer base buys (this would be a monster Halo sized hit). For the XBone (60 million customers), that is a $30 million dollar profit.

For Sony (90 million customers), that is 45 million.

So yeah, selling 3:2 is just vastly better all around, and leads to tons of extra money for the exact same thing.

But what percentage of new game sales will Sony lose to pre-owned copies?

Remember Sony and the publisher get jack from each pre-owned game sold.

As Totalbiscuit is always saying from his days working in a games shop; the guys on the till actively discourage customers who walk up to the till with a new copy and offer to sell them a used copy instead...

We can't have our cake and eat it. It is one way or it is the other way.

Option 1: The pre-owned game issue is irrelevant and nothing more than a worthless niche of keyboard warriors whining on forums. In this instance the pre-owned game issue will have no bearing on the sales of Xbox Ones and it will come down to other factors.

Option 2: Pre-owned games are a significant factor that are purchased by a large percentage of consumers and not just web forum minorities. In this instance Sony are going to lose a significant percentage of revenues and alienate publishers.

What I am suggesting is that in Option 2 Sony may need to outsell the Xbox One by more than a ratio of 3:2 if they want to deter publishers from favouring the Xbox One in terms of out right exclusives or time limited exclusives of games and DLC.

No one has answered Tobold's original question so we simply don't know by how much Sony need to outsell MS. All we are doing is speculating and because we are the worthless minority niche that discuss this issue on web forums we are likely perpetuating this anti-MS vibe that likely does not exist to such a great extent out in the real world.

It will likely be 2 or 3 years before we have facts. Even then, don't expect one or the other to "lose". Both consoles will likely sell enough units to remain viable for the entire generation. I doubt there will be another Saturn, DC or Wii U. In reality you will be puckering up and kissing the relevant backside if you like Halo or Uncharted. We roughly know which console will have which exclusives. Take your pick based on that and don't worry about these ultimately meaningless numbers. If you want to play Halo, Forza, GOW etc you will have to buy an Xbox regardless. No point saying "oh these numbers we pulled out of a hat look bad for MS" and then holding off a purchase hoping they will be released on PS4 after the Xbox One dies a couple of years from now!
Option 3: Used games sales support a large and avid customer base spending lots of money on your products, and you should also consider the sales caused by the knowledge you can get half your money out of the game, as well as the people who can afford gaming as a hobby because of used games. Those people may not be profiting the publishers NOW, but later when they get jobs and have income they'll be buying games. If you kick them out of the hobby now, you're going to be wondering why nobody is buying your games 10 years from now.

The whole used games are horrible thing is very reductionist. As the CEO of Nintendo said, if your games are flooding the used market, you might ask yourself what is wrong the game that no one actually wants to keep it for more than a week at a time.
It's always a vocal MINORITY, because quite simply the majority doesn't care enough to be bothered.

This is one perspective.

The other is that the majority follows this vocal minority who CARES about what happens to their beloved [fill in the blank].

However, Microsoft should be careful to distinguish between "pundits" decrying their decisions vs genuine power users who care.

Media loves people who generate controversy (hello Kanye). Pundits live and die (into obscurity) on the strength of how dramatic their pronouncements stand.

I doubt Xbox ONE is doomed. Pundits rarely get it right (because they are so extreme). Even Apple can innovate a bit still (Phil Schiller is a must see at WWDC).
I would be perfectly fine with the new direction that Microsoft are taking re: used games and locking games to accounts. I have 125 games in my Steam library, so it is clearly not an issue.

What is an issue is price. Despite the fact that games won't be able to be resold, the chances of deep discounting of games on Xbox Live or On Demand is virtually nil if you take Microsoft existing track record with Live into account.

When new release games are slated to be $120 Australian at retail and priced exactly the same for a digital download (as current On Demand games are on Xbox Live, seemingly regardless of age) then the used game market suddenly looks exceedingly interesting.

I do not hold out much hope for a better experience come the new Xbox, as they will keep prices high on digital sales to satisfy their retail partners.

It looks like Microsoft agreed with the posters that thought this was a big deal and a big win for Sony.

This console has been in development for years but the design philosophy was reversed in 1 week:
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