XboxOne and the First Sale Doctrine

[Scotterpop]

Maybe I'm missing something here, but don't these used game restrictions that Microsoft allegedly has in place for their new console violate the rights that consumers have under the First Sale Doctrine? I'm not an authority on the law by any means, but as I understand it as long as a customer legally acquires an official physical copy of a video game he or she is free to resell it. At that point, the copyright holder no longer has a say in the re-distribution of that item. So how can the publishers/console makers require a re-purchase of a used game disc to access its contents? Does the language of the EUSLAs bypass this doctrine or are our rights as consumers being violated? Maybe someone with a better understanding of legal practices in this matter can chime in...

[Zthun]

Maybe I'm missing something here, but don't these used game restrictions that Microsoft allegedly has in place for their new console violate the rights that consumers have under the First Sale Doctrine? I'm not an authority on the law by any means, but as I understand it as long as a customer legally acquires an official physical copy of a video game he or she is free to resell it. At that point, the copyright holder no longer has a say in the re-distribution of that item. So how can the publishers/console makers require a re-purchase of a used game disc to access its contents? Does the language of the EUSLAs bypass this doctrine or are our rights as consumers being violated? Maybe someone with a better understanding of legal practices in this matter can chime in...

There will be no fees for used games:

http://www.gameinformer.com/b/news/archive/2013/05/24/report-xbox-one-used-games-will-not-require-a-fee-will-require-authentication-checks.aspx

You can still sell the game. Once the game is sold, when said buyer installs the disc to the HD, it will reactivate it on that specific system and deactivate it on the sellers system.

[Bojay1997]

There will be no fees for used games:

http://www.gameinformer.com/b/news/archive/2013/05/24/report-xbox-one-used-games-will-not-require-a-fee-will-require-authentication-checks.aspx

You can still sell the game. Once the game is sold, when said buyer installs the disc to the HD, it will reactivate it on that specific system and deactivate it on the sellers system.

That hasn't been confirmed. Just as many sources are saying it will be as many have speculated that the subsequent user has to pay a reactivation fee. Either way, license based software has been done on the PC for decades now and courts haven't ruled that it violates first sale doctrine.

[Press_Start]

You can still sell the game. Once the game is sold, when said buyer installs the disc to the HD, it will reactivate it on that specific system and deactivate it on the sellers system.

How does that work exactly? Will Friend #1's Halo copy that he borrowed from me not work unless he and/or I are continuously connected online to verify? What happens if one or both loses internet connection, does the Xbone stop playing all together? And if i get impatient and just take another Halo copy from Friend #2, what's MS policy in handling Friend #1 copy?

[The 1 2 P]

How does that work exactly? Will Friend #1's Halo copy that he borrowed from me not work unless he and/or I are continuously connected online to verify? What happens if one or both loses internet connection, does the Xbone stop playing all together? And if i get impatient and just take another Halo copy from Friend #2, what's MS policy in handling Friend #1 copy?

While we are still waiting on confirmation for.....pretty much everything, a Microsoft rep did say that if you take a game to your friends house he would be able to play it with no charges as long as you signed in to your account since the game would have been initially activated on your system. That sounds very cumbersome, especially if, as you suggested, you just want to lend a friend your game and you don't want to go over his/her house and log into your account in order for them to play it. We are all still waiting for Microsoft to sort out this clusterfuck of misinformation that has been released since the XB1 reveal. All eyes are on E3.

[WCP]

The problem with Microsoft's new used game system, is that you can only sell and buy used games with specific retailers that have agreed to Microsoft's stipulations. It hasn't been completely detailed as to what the stipulations are, and the exact method how this all is going to work is unknown, but most people think that selling used Xbox One games on Craigslist, from one gamer to another, is going to be impossible. Same thing for selling and buying used Xbox One games on Ebay.

Instead, all transactions will go through Microsoft's Azure network. Mom and Pop local video game shops will have to shell out big bucks per month to rent Microsoft's Azure setup to validate all the transactions. This will limit it to mostly GameStop, Best Buy and a few other places. Microsoft and the Publishers will get a huge chunk of the revenue from any used game sales. I don't believe it's going to be possible to sell a game from one person, to another person, without it going through the Azure system, and when it goes thru that system, basically we are going to pay through our teeth to get these used games, and for all intents and purposes, the used game market will be dead.


Sure, technically, it will still exist. But the used games will be priced so high, and stay high for a much longer period of time, that in the grand scheme of things a huge chunk of the gaming population that would only buy games at extreme discount, those people aren't going to transition to next-gen. It's just not going to be worth it for them.

I can say that myself personally, I'm struggling with this situation myself. One part of me is an extremely hardcore early adoper type, that ALWAYS jumps on these new bandwagons immediately at launch. I'm the guy that sells my previous system for the launch system, and I don't look back (at least for about 7 years I don't). Yet, at the same time, I'm a guy that really enjoys having the ability to buy and sell used games on Craigslist and Ebay. If I buy a game, and I'm not using it anymore, I want to be able to sell that item. Also, if I'm willing to wait, and buy something used, I expect to get a pretty huge discount, and I'm willing to wait for games to no longer be the flavor of the month, and buy them used for 50 percent off the new price (or more). It's a real conflict of interest for me.

[Zthun]

How does that work exactly? Will Friend #1's Halo copy that he borrowed from me not work unless he and/or I are continuously connected online to verify? What happens if one or both loses internet connection, does the Xbone stop playing all together? And if i get impatient and just take another Halo copy from Friend #2, what's MS policy in handling Friend #1 copy?

So like Bojay said, there's a lot of different sources saying a lot of different things, but here's how I understand how a system like this works:

1. You buy a copy of Halo brand new, install it to your XBox, and play it for awhile.

2. You loan Halo to Friend #1. Friend #1 installs the game to his/her XBox and registers the game to his/her account. The game at this point, is unregistered from your account. If you try to play it again, you will either be prompted for the disc, or you will be prompted for the full retail price of the game.

3. Friend #1 takes too long and you borrow Halo from from Friend #2. You put the disc into your system and the new key is registered to your account and unregistered from Friend #2's account.

Again, that is just how I understand it from the article I linked. Microsoft will destroy services like GameFly if they do anything else.

[Tanooki]

Zthun that's how it is looking. And then in the case of first doctrine being brought up, it looks like it probably could be violated. As the owner of the game you do not have the right to transfer ownership of it on your own, you can only go to specific location that have that MS Azure kit in play so they can de-register you, re-register the next guy and there will be fees of a notable percentage per game that go back to both MS and the publisher too. You won't be capable of using ebay, craigslist, newspaper, facebook groups, etc to peddle a game from person A to B as they won't have the kit.

Clearly it's why it seems companies like EA are giving up on their pay pass for 2nd owners of games because MS will handle it for them keeping the blood of their hands so they can point fingers at MS directly. Sneaky and effective as it kills the used game market except for authorized aftermarket peddlers. And given the fees involved don't even thing the not generous 15-25% you get usually on a game at Gamestop will continue, they'll have to lower the cut even further to pay for those fees going back to MS+publisher to keep their profit margins in line. With that I could see plenty getting upset when they have a $60 game, finish it in a month, and then take it to Gamestop and get $5-10 for it (formerly $20~) in the end. At that low of a return I know I'd just say screw it and keep things which is what they want all along.

[Daniel Thomas]

Either Microsoft has completely lost their minds, or they are very confident in their lawyers. They must believe that they have a loophole that escapes the First Sale Doctrine that applies to packaged goods. Note how games won't actually run from the discs, but must be installed to the hard drive, like a PC. Perhaps this is MS' argument? I think it's a bullpucky argument, but that's just me. This issue will probably be settled in the courts.

Right now, the real question is Sony. Will they follow the same or similar policies, and restrict used/borrowed games? On one hand, the game industry is strongly in favor of restricting used sales; at the very least, they want a cut from used sales. This is because they're desperate for money, as production and marketing budgets continue to spiral out of control. Everyone's desperate for money and nobody seems willing to stop the graphics arms race (even though most consumers stopped caring years ago).

On the other hand, Sony sees the writing on the wall, and if Microsoft takes that decisive step to restrict used/borrowed games, it creates a massive opportunity for a rival to exploit. Sony could become the champion of used games, and they would defeat MS more or less instantly. They know they'll win the loyalty of consumers, hardcore gamers, and retailers like Gamestop. After the financial meltdown of PS3, this is just the break Sony desperately needs.

If nothing else, this is going to be a far more entertaining E3 than anyone expected. If Nintendo was smart, they'd wait for Sony and MS' press events, then quickly announce a $149 Wii U "Core" model that replaces the tablet with a Wiimote and Super Mario U. Unfortunately, this isn't a very smart business. Ah, well.

[Scotterpop]

If nothing else, this is going to be a far more entertaining E3 than anyone expected. If Nintendo was smart, they'd wait for Sony and MS' press events, then quickly announce a $149 Wii U "Core" model that replaces the tablet with a Wiimote and Super Mario U. Unfortunately, this isn't a very smart business. Ah, well.

Yeah, I'll definitely be glued to my computer screen for a couple of days to see what details are revealed surrounding these issues.

As much as I would love to see Sony side with the gamers and public opinion, I'm fairly certain that they'll have some kind of similar DRM scheme on the PS4. Their silence lately speaks volumes. Otherwise their PR department would be all over this uproar, assuring us that no such restrictions would be incorporated into the next Playstation. My guess is that they're trying to find the right spin to put on it as they watch Microsoft being raked over the coals.

DEFINITELY gonna be an interesting E3 this year...

[Bojay1997]

Either Microsoft has completely lost their minds, or they are very confident in their lawyers. They must believe that they have a loophole that escapes the First Sale Doctrine that applies to packaged goods. Note how games won't actually run from the discs, but must be installed to the hard drive, like a PC. Perhaps this is MS' argument? I think it's a bullpucky argument, but that's just me. This issue will probably be settled in the courts.

Right now, the real question is Sony. Will they follow the same or similar policies, and restrict used/borrowed games? On one hand, the game industry is strongly in favor of restricting used sales; at the very least, they want a cut from used sales. This is because they're desperate for money, as production and marketing budgets continue to spiral out of control. Everyone's desperate for money and nobody seems willing to stop the graphics arms race (even though most consumers stopped caring years ago).

On the other hand, Sony sees the writing on the wall, and if Microsoft takes that decisive step to restrict used/borrowed games, it creates a massive opportunity for a rival to exploit. Sony could become the champion of used games, and they would defeat MS more or less instantly. They know they'll win the loyalty of consumers, hardcore gamers, and retailers like Gamestop. After the financial meltdown of PS3, this is just the break Sony desperately needs.

If nothing else, this is going to be a far more entertaining E3 than anyone expected. If Nintendo was smart, they'd wait for Sony and MS' press events, then quickly announce a $149 Wii U "Core" model that replaces the tablet with a Wiimote and Super Mario U. Unfortunately, this isn't a very smart business. Ah, well.

The issue has already been settled in the courts. License agreements like those that would apply to Xbox One and possibly PS4 games are perfectly legal. If you don't agree to the terms, you simply don't buy and install the software. As a consumer it sucks, but this idea that lawsuits are going to be filed is laughable.

[WCP]

I could see plenty getting upset when they have a $60 game, finish it in a month, and then take it to Gamestop and get $5-10 for it (formerly $20~) in the end. At that low of a return I know I'd just say screw it and keep things which is what they want all along.

Yeah, most people will get so fed up with it, that they won't even bother with the retail disk in the first place. They'll download it digitally, and that's REALLY what they want.






As much as I would love to see Sony side with the gamers and public opinion, I'm fairly certain that they'll have some kind of similar DRM scheme on the PS4. Their silence lately speaks volumes. Otherwise their PR department would be all over this uproar, assuring us that no such restrictions would be incorporated into the next Playstation. My guess is that they're trying to find the right spin to put on it as they watch Microsoft being raked over the coals.



Yeah, conventional wisdom would say that Sony will follow along with Microsoft, and pretty much enact similar enough policies, policies which are really designed to keep the biggest publishers happy, namely EA, Activision, UBI Soft and 2K games. See, that's the real question. Is the pressure really coming from EA only, or are all the big 3rd parties behind this ? If it's only EA, I think Sony could say F it, and say that they aren't going along with the program. Of course, EA could say, "Well, then say bye-bye to Fifa, Madden and Battlefield. While that would really hurt Sony to a degree, Sony would get street cred from the gamers for standing up to evil EA. Also, if Sony were to sell so much better than Microsoft, eventually EA would be pressured to go back to Sony with their tail between their legs.

However, if there is significant pressure from Activision and Ubi Soft and 2K games and Bethesda and Capcom, etc, etc, then I can't see Sony telling all those companies that they aren't going to follow the New World Order Agenda (of console gaming) Sony will have to fall in line, and do what these guys want, because otherwise the Xbox would have a ridiculous number of exclusives that would probably end up killing the PS4.


Also, you've got to wonder about a dirty little word called "collusion". I wouldn't be the least bit surprised if secret meetings between Sony and Microsoft have taken place. Maybe MS was the guy fighting for this, and Sony basically said, "Ok, you want this bad enough, then you get out in front of it, you be the bad guy, we'll stay in the background as long as we can, and then at the last minute we will fall in line and do the same thing. This will allow us to save a little bit of face, and avoid the worst part of the backlash, and you'll get what you really want, because in the end we'll follow the program and the used game market will never be the same again.

[kupomogli]

"At a roundtable this morning, Sony's game studios chief, Shuhei Yoshida, told reporters that any requirement for users to register a game online in order to play it would be left to game publishers. Sony won't require that."

This has already been posted that PS4 DRM will be left to the publishers, much like online passes are now. Any publisher that adds a used game pass to their title, the title is going to bomb. Guaranteed. We'll have to see what publishers, if any, have the balls to actually go through with a used game pass, but for now, I'm going to think none do and take it that PS4 has the same DRM that PS3 has. Online passes only.

[Sabz5150]

you simply don't buy

Fair enough. That thing looks like a freakin' nightmare from the ground up.

Vote with your wallet.

[Scotterpop]

"At a roundtable this morning, Sony's game studios chief, Shuhei Yoshida, told reporters that any requirement for users to register a game online in order to play it would be left to game publishers. Sony won't require that."

This has already been posted that PS4 DRM will be left to the publishers, much like online passes are now. Any publisher that adds a used game pass to their title, the title is going to bomb. Guaranteed. We'll have to see what publishers, if any, have the balls to actually go through with a used game pass, but for now, I'm going to think none do and take it that PS4 has the same DRM that PS3 has. Online passes only.

Man, I sure hope this turns out to be the case when the PS4 is finally released. If so, Sony is definitely positioning itself to be the more attractive console for gamers. The customer should ALWAYS have choices, pure and simple. By building the DRM into the console, the customer has no choice but to accept these terms for every game they want to play. But if it that decision is left to the publisher and the DRM appears on some discs and not others, then the customer can say "The hell with that, I'm not buying your game! I'll buy this other one instead." And that's very empowering, and it's what a customer wants, regardless of the product. We all know where the pressure is coming from to restrict used game sales: The publishers. So let them take the heat. This seems to be Sony's stance and I think it is a healthy one, one that will benefit them in the long run.

[Buyatari]

There will be no fees for used games:

http://www.gameinformer.com/b/news/archive/2013/05/24/report-xbox-one-used-games-will-not-require-a-fee-will-require-authentication-checks.aspx

You can still sell the game. Once the game is sold, when said buyer installs the disc to the HD, it will reactivate it on that specific system and deactivate it on the sellers system.

Indirect unofficial Microsoft sources......

We will see.

[TonyTheTiger]

The issue has already been settled in the courts. License agreements like those that would apply to Xbox One and possibly PS4 games are perfectly legal. If you don't agree to the terms, you simply don't buy and install the software. As a consumer it sucks, but this idea that lawsuits are going to be filed is laughable.

There has been a lot of back and forth over issues such as jailbreaking, however. The courts are not in perfect agreement on whether or not you really can do anything you want to a piece of hardware you legally bought. The cases will continue to be brought as new and novel issues pop up for all kinds of hardware. One reason this is hasn't been settled is because the DMCA was essentially cobbled together in a panic and clashes hard with some basic libertarian principles espoused in the political and economic ideologies held by most Americans. You can freely smash your Xbox with a hammer yet you can't make it it do X, Y, or Z? Forget being good law, I'd go so far as to argue the thing barely makes sense.

Where this would get seriously dicey is if some exploit were discovered by which an Xbox One could be made to play a game without submitting to Microsoft's built-in "protections" (something that's probably inevitable). It would be awfully unconvincing, I think, for Microsoft to argue against a practice that does nothing except...make the One function like every previous console ever, including Microsoft's own. Nintendo lost to Galoob, remember. And this scenario would be essentially the exact same thing (the console manufacturer not liking some non-approved end user modification). And Sony v. Universal is still good law as far as I'm aware, and can probably be teased out enough to apply to this issue.

[Bojay1997]

There has been a lot of back and forth over issues such as jailbreaking, however. The courts are not in perfect agreement on whether or not you really can do anything you want to a piece of hardware you legally bought. The cases will continue to be brought as new and novel issues pop up for all kinds of hardware. One reason this is hasn't been settled is because the DMCA was essentially cobbled together in a panic and clashes hard with some basic libertarian principles espoused in the political and economic ideologies held by most Americans. You can freely smash your Xbox with a hammer yet you can't make it it do X, Y, or Z? Forget being good law, I'd go so far as to argue the thing barely makes sense.

Where this would get seriously dicey is if some exploit were discovered by which an Xbox One could be made to play a game without submitting to Microsoft's built-in "protections" (something that's probably inevitable). It would be awfully unconvincing, I think, for Microsoft to argue against a practice that does nothing except...make the One function like every previous console ever, including Microsoft's own. Nintendo lost to Galoob, remember. And this scenario would be essentially the exact same thing (the console manufacturer not liking some non-approved end user modification). And Sony v. Universal is still good law as far as I'm aware, and can probably be teased out enough to apply to this issue.

But this isn't really going to be about jailbreaking or otherwise modifying the hardware based on my understanding of the various rumors. I believe that the cloud based co-processing or storage that Microsoft has been talking about is an easy means of invalidating any benefit jailbreaking or modifying the Xbox One might have to a user. The software disc and hard drive installation isn't really going to be all you need to play a game anymore. As such, I don't think First Sale Doctrine will be of much use here. Microsoft will simply say that they have done nothing to prevent first purchasers from transferring the ownership and content of the disc, but that the ancillary services required to support the game are done on a licensed basis and require an additional fee for subscription, just like on-line passes are done currently. It's not like other consumer products that are essentially stand alone as long as you can override a hardware based security check, it's a hybrid model going forward.

[TonyTheTiger]

Is the cloud really going to be so all-encompassing? If that's the case, why aren't they just going exclusively digital distribution? Yeah, the console requires an Internet connection but the obvious assumption is that it wouldn't require a great one. If the disc (or, rather, the data on it) and the internal hardware aren't all you need for basic functionality (barring the simple online checks) that essentially destroys anybody who has shit Internet. Forget lending or reselling their games, imagine how pissed off people will get when they find they can't even play them.

[Bojay1997]

Is the cloud really going to be so all-encompassing? If that's the case, why aren't they just going exclusively digital distribution? Yeah, the console requires an Internet connection but the obvious assumption is that it wouldn't require a great one. If the disc (or, rather, the data on it) and the internal hardware aren't all you need for basic functionality (barring the simple online checks) that essentially destroys anybody who has shit Internet. Forget lending or reselling their games, imagine how pissed off people will get when they find they can't even play them.

The speculation seems to be that Microsoft really doesn't care about the small percentage of the market that doesn't have reliable broadband Internet. While I am personally troubled by that position given that my brother was at sea with the US Navy and said that his Xbox 360 was the only thing that kept him from going stir crazy (they had no way of accessing the Internet other than at a few e-mail terminals), I understand the financial reasons for why that might not be their target market. Essentially Microsoft makes an overwhelming amount of revenue from a very specific kind of user with the highest attach rate for games and peripherals, who buy annual subs to XBL Gold and regularly buy DLC and digital only titles. Frankly, I suspect that people with poor quality Internet tend to be people with less economic stability who also tend overwhelmingly to buy less software and/or primarily used software or people who simply can't use the Internet because of their job or other factors. In a world where even this late in the cycle hardware only produces a very slim profit margin if any, those gamers are not of much financial value as used game sales and Silver XBL accounts provide little or no revenue to Microsoft.

[Cornelius]

Is this (potential) scenario with 2 competing models exactly what the big publishers want to see? So looking at it from the publishers' perspective, they get a real world test to see which route makes them more money. I believe that Microsoft has enough customer loyalty that they can go as severe as they want with DRM and no-used-sales and still remain in the market. Sony can proceed with the same situation on the PS4 that they have with the PS3. Then with some guessticorrection for lost customers/potential sales the publishers can see if their increased revenues on the XboxOne from their cut of the used sales is worth the overall fewer customers. And the reverse with the PS4, plus have it as sort of a backup in case consumers really do just wholly reject draconian used sale policies in favor of PC gaming, mobile platforms, Nintendo, etc.

I dunno, I guess that is kinda dumb since the publishers really just want it all to go digitial (and it will at some point). Maybe I'm just cynical and believe that the big publishers work closely with Sony and MS and 'they' have this all worked out together.

[TonyTheTiger]

The speculation seems to be that Microsoft really doesn't care about the small percentage of the market that doesn't have reliable broadband Internet. While I am personally troubled by that position given that my brother was at sea with the US Navy and said that his Xbox 360 was the only thing that kept him from going stir crazy (they had no way of accessing the Internet other than at a few e-mail terminals), I understand the financial reasons for why that might not be their target market. Essentially Microsoft makes an overwhelming amount of revenue from a very specific kind of user with the highest attach rate for games and peripherals, who buy annual subs to XBL Gold and regularly buy DLC and digital only titles. Frankly, I suspect that people with poor quality Internet tend to be people with less economic stability who also tend overwhelmingly to buy less software and/or primarily used software or people who simply can't use the Internet because of their job or other factors. In a world where even this late in the cycle hardware only produces a very slim profit margin if any, those gamers are not of much financial value as used game sales and Silver XBL accounts provide little or no revenue to Microsoft.

The part that MS should be concerned with, though, is console attach rate. It's a lot easier to attract publishers when you can say "20 million sold" or "50 million sold." The more you pigeonhole your product, the more chances for the competition to become market leader as consumers are put off by the extra layers of complexity, even ones that may fit your requirements. And we know what happens when there's a clear market leader. There's usually a kind of unstable equilibrium at play once the console race determines a "winner." The more a console pulls ahead, the more likely it is for it to pull even further ahead as publishers start migrating toward the larger install base and consumers start migrating toward the larger library. And with the economy of 2013 vastly different from that of 2005, console sales will probably be slower as a whole compared to last gen which only compounds the problem. Microsoft is taking a gamble that the One will, if not "win," at least perform well enough to function as proof of concept so that the subsequent generation can essentially eliminate retail completely without any serious drama.

[Cornelius]

The part that MS should be concerned with, though, is console attach rate. It's a lot easier to attract publishers when you can say "20 million sold" or "50 million sold." The more you pigeonhole your product, the more chances for the competition to become market leader as consumers are put off by the extra layers of complexity, even ones that may fit your requirements. And we know what happens when there's a clear market leader. There's usually a kind of unstable equilibrium at play once the console race determines a "winner." The more a console pulls ahead, the more likely it is for it to pull even further ahead as publishers start migrating toward the larger install base and consumers start migrating toward the larger library. And with the economy of 2013 vastly different from that of 2005, console sales will probably be slower as a whole compared to last gen which only compounds the problem. Microsoft is taking a gamble that the One will, if not "win," at least perform well enough to function as proof of concept so that the subsequent generation can essentially eliminate retail completely without any serious drama.

That's well-put. I guess I don't see MS sales ever being low enough that the big publishers are going to pull games. In other words, EA is going to make Madden for both systems no matter what. Smaller publishers and bad porting are a different story and could be enough to lead to what you describe.

I dunno, I've avoided any of this speculation until today because we don't really know anything final, just getting sucked in.

[Buyatari]

Ok for the sake of argument perhaps the "used market" is safe.....

What of the classic market? After Xbox one is no longer supported none of these games will play. You have to log on once a day so even the games you yourself purchased on day one will no longer work on the system?

[TonyTheTiger]

I'm convinced that preservation will be possible through some form of circumvention (or "piracy" if you want to go there). Take the Satellaview as an example. While not perfect by any stretch, it is still pretty well preserved when you factor in the time period and the strange nature of the software. And there are still discoveries being made and emulation progress to follow. With modern technology and more people today not only playing games but actually being concerned about their preservation, I have a hard time believing that stuff like DLC, digitally distributed software, and the Xbox One will ever be "lost." It'll be a bigger pain in the ass but I don't think we're in for some bleak future with entire console libraries vanishing into the ether.