The only game in town
Posted at 19:28 on 19th October 2005 - permalink

As I write this, Microsoft are a few weeks away from launching their new, ‘next-generation’ home console, the Xbox 360. As with any new console, it’ll be a good few months beyond the feeding frenzy of launch day before it will be possible to get a clear picture of whether the machine is worth the investment. I typically buy consoles once they’ve had a chance to settle in, with the clear intention of playing specific games.

It’s all about the games, of course. It’s not important that Microsoft (or Sony) are currently making noises about wanting their console to act as a media centre. (I seem to recall Commodore calling their hardware ‘business machines’ for years after they became entrenched as pure games machines, and even the Famicom was marketed as… well, you know.) As long as a hardware manufacturer’s starry-eyed multimedia ambitions for their console don’t horribly cripple its gaming functionality in some way, there’s no problem, right?


Regrettably, one piece of information has been released about the Xbox 360 that will be keeping me far away from the queue on launch day: the fact that it will once again employ Xbox Live as its sole means of facilitating online multiplayer games. Until this situation is rectified, the Xbox 360 does not meet the minimum requirements of a next generation console. (Excuse the melodrama, but if you consider we’re going to be riding this wave of hardware for the next five years, it’s not unreasonable to predict that expectations are going to shift.)

At this point, any self-respecting Xbox Live user will no doubt be indignantly snorting into their headset and composing an email about how utterly orgasmic their experience of using the Live system has been. To save them the effort, I should point out that my problem doesn’t lie with the Xbox Live service in itself. I’m sure the experience is perfectly fine, and well worth the subscription fee, especially if you fall into the target teen male demographic. Rather, the problem is that Xbox Live is the only route available for developers to offer online gameplay in an Xbox title.

To reiterate: if a developer wants to make an online game for the Xbox, they have to use Xbox Live. They are contractually forbidden from using the machine’s network functions for any other purpose than to connect to Xbox Live (or system link) games. They can either make their game offline only, or use Live. The option to include online play which doesn’t cost their users an extra $50 a year (little if any of which ever filters back to the developer), and where they can choose the networking solution that best suits their game doesn’t exist.

“Bottom line, we made Xbox Live a single, unified service because gamers told us they want it.”

So why is this a problem?

For one thing, the artificial limitations of the system prevent developers from running their own servers, or releasing (PC) dedicated servers for their games. Up to this point, this restriction has ruled out the possibility of third parties running massively multiplayer games. It has also resulted in a large number of Xbox Live games (including, bizarrely, several first party titles) using peer-to-peer setups (where one of the players’ Xbox acts as a listening server) instead of incurring the cost of Microsoft-run dedicated servers. As a result, these games can only support a drastically limited number of simultaneous players and can also give a slight advantage to the host player.

Similarly, all patches and updates have to be delivered through the Xbox Live infrastructure, increasing the cost and complexity of maintaining the client software.

Another limitation is that Xbox users are prevented from playing games against users on other platforms. (It has been reported that this limitation is to be waived for the forthcoming Xbox 360 port of Final Fantasy XI, although it is unlikely to be done away with across the board.) This has obvious detrimental effects on the size and sustainability of the user base of the Xbox incarnations of online games that have been successful on other platforms (the textbook example being the botched Xbox port of Phantasy Star Online), and is also counterintuitive for customers purchasing multi-platform games (e.g. most popular sports titles) with the intention of playing against their friends who own the same game on another format.

The fact that players wishing to access Xbox Live have to pay a subscription fee introduces another raft of problems. The system-level fee effectively removes the opportunity for a third party publisher to charge a game-specific subscription fee for a game that actually incurs significant running costs (which is the other reason there are still no massively multiplayer games on Xbox Live) – players baulk at being charged twice. (Update: it has now been revealed that MMO games released on the Xbox 360 will not require Xbox Live ‘Gold’ membership in addition to game-specific subscription costs.)

Charging a (monthly or annual) fee instead of making the system open to all heavily skews the subscriber base toward players who are already comfortable and familiar with online gaming, which runs counter to Microsoft’s early rhetoric about bringing online console gaming into the mainstream.

Developers of Xbox Live games have to work around the limitations listed above, and have to minimise their risk (seeing as they have no means to recoup any meaningful amount of revenue from adding an online component to their games) by catering for the demographic that makes up the bulk of the Xbox Live userbase: American males aged 17-24. This has resulted in a vicious cycle that has quickly reduced the choice of Live-enabled genres to just shooting, racing and sports. (It has also drawn attention to Microsoft’s unwarranted decision to make voice the only available means of communication. Live users frequently complain of their forays online being ruined by the proliferation of shrieking pubescent American racists.)

In summary, Xbox Live attempts to be a ‘one-size-fits-all’ solution that in reality only caters for thin slivers of the online gaming market and the development community. Which is why alternatives need to be made available.

“We said we’d like to get our penetration up to about 50 per cent – including Silver, the people who are on there for free.”

Of course, Microsoft’s logic for imposing such draconian limitations on the Xbox Live system makes sense in the abstract. The entire console business is based on variants of the old ‘give away the razors, sell the blades’ strategy of product tying. This strategy is popular because it works. Xbox Live is essentially a (wholly inappropriate) attempt to transpose this extremely successful model to the network gaming space. Xbox Live is a closed system for the same reason games consoles themselves are closed systems – to ensure that the subsidised hardware can only be used in ways that generate revenue for the hardware manufacturer. Apparently it isn’t enough for Microsoft to charge the highest licensing fees in the business on boxed software. They feel it’s necessary to keep skimming from the publishers and users once they’ve taken the game home.

When applied to games consoles and their software, product tying (in the form of proprietary formats and licensing fees), while not a perfect state of affairs, offers a compelling and obvious benefit to the consumer: powerful, heavily-subsidised gaming hardware, which no hardware manufacturer would be able to offer without a guaranteed means of recouping their losses through officially-sanctioned game sales.

However, as anyone who has ever bought an inkjet printer or a Nintendo 64 is all too aware, not all forms of product tying are benign. If the limitations imposed on the system are too obviously contrived to maximise profit, and impact too heavily on the functionality of the system or the sustainability of the software ecosystem surrounding it, this will lead to consumers and content providers looking for a way out of the system. This presents an opportunity for rival suppliers to lure them away. Product tying is a balancing act. Interfering too much limits growth, but taking a completely hands-off approach encourages crap-flooding.

Microsoft are quick to point out that the closed nature of the system allows them to include features that would otherwise not be possible.

The success (if you can call failing to convince 90% of your userbase to try online gaming even after four years and hundreds of millions of dollars of investment a ‘success’) of the Xbox Live system to date has hinged on its much-touted convenience. Convenience is a very powerful motivator. For proof of this we need only look at iTunes Music Store, where immediacy and the guarantee of reasonably acceptable recording quality are seen by millions of customers as an acceptable tradeoff for arbitrary pricing and DRM.

None of the features that contribute to Xbox Live’s convenience are dependent on alternatives being locked out.

Xbox Live afficionados will enthuse (with good reason) about having a unified identity, voice chat, matchmaking and consistent security. They don’t offer compelling reasons as to why these features should be mandatory or applied at the system level. (The argument that these features are funded by the subscription fee is neatly discounted by Microsoft themselves: on the Xbox 360 all the perks of Live membership are provided free as part of the entirely pointless Xbox Live Silver service.)

If a game doesn’t offer one or all of these secondary benefits, it doesn’t necessarily impact on the gameplay at all. I can give myself the same nick as my gamertag (that is, if I want the same people to find me in every game), I can hook up an alternative voice client or Skype or a keyboard (or, god forbid, shut up and play), I can quite happily work with whichever flavour of matchmaking or punkbusting middleware that the developers have selected. Xbox Live’s defenders seem to forget that third party developers and publishers also have a strong interest in making their players’ online experience as enjoyable as possible – especially if that quality translates directly to extra revenue through subscriptions or game sales.

Essentially, it comes down to this: if a game was available for the Xbox (or 360) that offered a great online mode but didn’t use Xbox Live, would people still buy it? To which the answer is obviously, “yes”. Would the game’s publisher prefer to target a potential audience of 10% or 100% of the userbase? To which the answer is “Well, duh.” By this point it should be obvious that Xbox Live is trading off a substantial amount of functionality and software support in the name of convenience.

Convenience at the expense of choice isn’t really very convenient at all.

“Xbox Live Silver will be huge, there’s no doubt. There’s no reason for you, if you have a broadband or a high speed internet connection in your home, not to just lean over and plug in your Xbox 360, and you’re up and running. We think that will be an incredibly valuable key differentiator yet again in the next generation.”

At the end of the day, the only party who can fix this catalogue of ills is Microsoft, and they seem perfectly happy for Xbox Live to continue as a small but heavily-milked niche. Meanwhile every other forthcoming home console (as well as the DS and PSP) promises online gaming with no subscription fee, and no developer lock-in. Third parties will be perfectly capable of copying the best features from Live’s interface while not having to worry about limitations designed to further tilt the playing field in the hardware manufacturer’s favour. As crazy as it may sound, there’s a very real possibility that Playstation 3 network gaming will out-evolve Xbox Live in the same way the World Wide Web put paid to locked-down services like CompuServe, AOL and MSN (1.0).

Microsoft’s strategists need to stop congratulating themselves for being the most successful player in a market where they’re the only ones competing, and start thinking about how they can retain support for Xbox Live in this new climate. It would be nice to think that they’re already waking up to this, and that the current plan for an Xbox Live Silver service and regular ‘free weekends’ are leading up to the subscription fee being dropped altogether. This still won’t tackle the problem of developer lock-in and the other contractual limitations described above, but it would at least go some way to keeping their offering competitive.

This article on Gamasutra has more technical details of the Xbox Live infrastructure.

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