From concerns over used games to questions about an always-online requirement, the Xbox One is growing more controversial by the day. Sony’s PS4 reveal was met with mixed reactions by most gamers. This was largely due to the system’s mixed-bag debut—some things were good, some bad, but mostly it was all a bit lackluster. But at least we saw some games, some new exclusives, and a wide variety of developers and titles ranging from indies to big AAA stuff like the new Killzone. Microsoft’s Xbox One reveal was decidedly more controversial, and while I think the new console will have a lot going for it, there is plenty of reason to be concerned. Many of these concerns stem from mixed messages Microsoft is sending to the press and to gamers about what this new console will entail in regard to everything from the internet to used games. We’re left to wonder whether this is merely a problem with communication or a much deeper and more worrisome problem with vision. While Sony has made it clear that they’ll target the “core” gamer demographic with the PS4, Microsoft’s target audience is more nebulous. Now, to the list…. 1. Privacy The Xbox One comes packaged with the next-generation Kinect 2.0. This time around, the Kinect will be more versatile and accurate than the original, measuring everything from your facial expressions to your heart rate. And Microsoft would like as many games as possible to take advantage of it, whether by utilizing its voice commands or its motion detection system. But the next Kinect isn’t a “peripheral” gadget. Not by a long shot. The device is a required component of the Xbox One system and you’ll need to have it on and connected at all times—always watching, and always listening, to its users. What this means for the games we play is an open question, but it certainly raises privacy concerns. German Federal Data Protection Commissioner, Peter Schaar, has called the always-on Kinect “a twisted nightmare.” Having your emotional data—conveyed through heart rate data, facial recognition, and so forth—recorded and stored on Microsoft’s servers does seem problematic at the very least. Microsoft (MSFT) vice president Phil Harrison told Eurogamer that this doesn’t equate to “snooping.” “Microsoft has very, very good policies around privacy,” he said. “We’re a leader in the world of privacy, I think you’ll find. We take it very seriously. We aren’t using Kinect to snoop on anybody at all. We listen for the word ‘Xbox on’ and then switch on the machine, but we don’t transmit personal data in any way, shape or form that could be personally identifiable to you, unless you explicitly opt into that.” In the age of Facebook and mounting privacy concerns across the tech world, a gadget monitoring your physical, corporeal being at all times is alarming whether or not Microsoft couches it all in anonymity. 2. Region-locking The Xbox One will use region-locking to lock games down geographically. The reason for this—on any of the many devices and media formats region-locking exists—remains shrouded in the fog of pointless ideas. “Similar to the movie and music industry, games must meet country-specific regulatory guidelines before they are cleared for sale,” Microsoft told Digital Trends. “We will continue to work with our partners to follow these guidelines with Xbox One.” This is hardly surprising, though it is disappointing, especially for gamers in regions where games are not available thanks to region blocking. Whenpressed by Polygon Microsoft declined to give any more details. Of course, region-locking is not actually necessary at all. The PS3 has just one game that is region locked out of its entire catalog: Persona 4 Arena. If Sony can create a region-free device, surely Microsoft can do the same. 3. Used Games This is one of the most controversial pieces of the Xbox One puzzle. I admit to being perhaps a little too sanguine about this at first, or at least about reports that Microsoft and game publishers might take a piece of the used game pie from GameStop. The real issue with used games isn’t GameStop (whose business model I’m not a fan of) but rather the end-user. According to statements made by Phil Harrison (both at Kotaku and Eurogamer) the age of used games isn’t quite over, but things will never be the same. Basically if you want to lend a game to a friend they can either log into your account to play it for free, or pay for the game (probably at full retail price) if they want to play it on their Xbox Live account. This is because games are no longer really being sold, they’re being licensed. The physical disc is just a delivery system, and the “bits on the disc” are not as important as the code downloaded to your hard drive. What Microsoft is doing here is both sensible and a bit ahead of its time. I say “sensible” in that they’re basically emulating the digital distribution model already in place on PC with a platform like Steam. If I own a Steam game I can play it on any computer, but if a friend wants to play it they’ll need to log into my account to do so. The future of used games and their retailers remains unclear. The problem here is that unlike PC, console gamers are used to buying (and then lending or selling or trading in) physical copies of their games. The age of digital distribution and all of its drawbacks and benefits has not arrived for console gamers yet. It will, and Microsoft is sensible enough to anticipate it, but there will be some big bumps along the way. For one thing, while many different digital distribution platforms exist on PC in competition with one another, this is not the case on consoles. Currently there is no real pricing competition between Sony and Microsoft, meaning that the lower prices we often see on a platform like Steam and its competitors, haven’t arrived on consoles yet. I believe they will, eventually, when one of these console manufacturers realizes that they can make their system enormously attractive by offering cheaper games than the competition, but we’re not there yet. One way Microsoft could really take the sting out of this would be to make digital copies of games cheaper than retail from day one. Another would be to allow for free transfers of game codes, or for a lending system similar to Amazon’s Kindle lending (whereby one book at a time can be loaned out to another device.) “The bits that are on the disc, I can give to anybody else, but if we both want to play it at the same time, we both have to own it,” Harrison told Eurogamer. “That’s no different to how discs operate today.” But it is different. If I lend you my game today I certainly couldn’t play it at the same time as you, but you could play it to your heart’s content without paying and you could keep playing until you give it back to me (or “lose” it.) You can do all of this without logging into my account, which is a huge inconvenience for me, since I’d no longer be able to log into it to play my games, or watch Netflix, etc. One purchase for one game that could be played only by one person at a time is what we have already. What Microsoft is describing is something much more costly to consumers. Microsoft could easily implement a system of game sharing that prevented people from playing at the same time but didn’t require separate purchases or account sharing. They could do all of this while still requiring better policies out of used game retailers and still not prevent peer-to-peer transactions. If Microsoft wants to change the used game landscape to pave the way toward digital distribution, they can do so without implementing hugely anti-consumer practices at the same time. Indeed, they have an opportunity to do digital distribution right. There’s no reason they can’t make buckets of money while still benefiting the consumer. 4. Mostly always-online Always online: What could possibly go wrong? Harrison told Kotaku that while gamers wouldn’t need an online connection 24/7, they would need a connection from time to time to play even offline, single-player games. Harrison indicated that for non-online functions, users would still need to log in once a day. Microsoft, which appears to be in a state of constant damage control lately, responded to their own vice president’s statements on used games and an online connection by calling them “potential scenarios.” “While Phil [Harrison] discussed many potential scenarios around games on Xbox One, today we have only confirmed that we designed Xbox One to enable our customers to trade in and resell games at retail,” the company said. They added that the specific details surrounding when users would need to log on to the internet remains up in the air. “There have been reports of a specific time period,” the company said, however “those were discussions of potential scenarios….” Which means we’ll have to guess until more details emerge. Again, it’s perfectly sensible for Microsoft to embrace the cloud and reap its benefits. Consumers stand to gain all sorts of convenience from cloud-based computing, whether that’s a steady stream of updates and new content or saving games across devices. Microsoft can provide better services and possibly even some server-side muscle to video games. But there’s absolutely no reason to force consumer participation. Make a service attractive enough and get consumer buy-in, but don’t force an ecosystem that your core consumer base finds repellent. Most consumers will happily log into the internet and remain logged in all the time and will enjoy the services and benefits the cloud provides. But some consumers may have no internet access (or poor internet access) and others might just prefer to play single-player games without worrying about their internet connection. All of this is complicated by the fact that Xbox Live is a paid service. 5. Show me the video games! Finally, but just as importantly, gamers have plenty of reason to be worried about Microsoft’s commitment to games. For years the console manufacturer has distanced itself from gaming and the “core” gaming audience. The Xbox One presentation did its best to compound these fears: we saw lots of stuff about TV and the entertainment ecosystem the company hopes to provide, but very little about the games themselves (and the ones we did see were cross-platform.) There’s nothing wrong with trying to win the war for the global living room, but Microsoft shouldn’t forget who its core consumer base is either. People who want to stream Hulu can buy a Roku (or an Xbox 360.) People who want to watch TV already have their DVRs and other devices. The only people really excited about the Xbox One are people who want to play next-gen video games. Microsoft needs to focus more on the video games that will define their system, and they really need to announce some non-Kinect exclusives for the Xbox One at E3. Maybe E3 will kill this concern, maybe not. But as it stands, Microsoft seems to be forgetting who their most important customers are. We don’t know what the final product will look like in terms of how the Xbox One will function, partly because Microsoft’s information has been “inaccurate and incomplete” so far. It certainly makes sense for the company to withhold some stuff for E3, but sending out so many mixed messages is tantamount to aiming both barrels at their feet and firing repeatedly. In the long-run, I still think that a move to digital distribution will benefit consumers. As a consumer of other types of media (and digital distribution on PC) I believe I have benefited from this, whether it’s streaming music services like Rhapsody or the rise of eBooks. But in the near-term I think we’re going to feel the growing pains of a changing industry and an evolving technology. While many observers have noted how this will impact consumers, I think companies like Microsoft should think about how it could impact their own bottom line as well. This is inevitably tied to what gamers are actually willing (and able) to pay. Gamers who purchase used games or lend their games to friends often do so because they cannot afford to purchase new games at $60 a piece. Hampering used games and the capacity to lend or gift your own games without a very real price drop for new games won’t magically lead to more new game sales. Gamers have finite resources. Digital distribution results in cost-savings for producers who can skip retail, skip shipping costs, and forego manufacturing the actual discs, but those savings need to be passed on (at least to some degree) to consumers to offset the eventual end of used games. I maintain an optimistic long view of the video game industry, but I’ve no doubt at all we’re in for stormy weather. PS: As always, I’m rooting for Microsoft here. Just like when I critique or analyze most businesses in the video game industry, my intent is to benefit both the companies themselves and the consumers. My personal philosophy is that treating customers right is the best business strategy for long-term success. I hope that Microsoft and other players in the video game industry listen to consumer feedback and adjust their strategy accordingly. I think in the long run this will create a win-win situation. Hopefully many of these concerns are put to rest by E3. We shall see.