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Yesterday Microsoft announced that it would be reversing it's used game / online requirement / DRM policy that caused an internet uproar among gamers. The rumor was first reported by Patrick Klepek of GiantBomb.com then Microsoft released an official statement shortly after.

The "180" degree turn coming right out of E3 was really unexpected. Many hoped they would change before the system launched but no one thought it would be so soon. Some say it was the pre-order numbers that were lower than expected while Sony's PS4 skyrocketed to #1 on Amazon right after being offered. Forbes pointed out on Sunday that the first day order of PS4's had sold out on Amazon and sources told them PS4's were out selling XBox One's 2:1. If that was the case then I'm sure that would give Microsoft reason to at least reconsider a different position.

My personal theory, which I call the "Fallon Effect", and what I believe caused the historical pivot from Microsoft today. This week Fallon showed the Xbox One on Monday and the PS4 on Tuesday. Jimmy Fallon mentioned that the PS4 was the only system that supports used games (which was technically not true). The architect of the PS4, Mark Cerny took the opportunity by saying, "we support used games and we don't require an internet connection". At that point someone at Microsoft saw that, on national TV and realized it was time to abort the mission. 

I think Microsoft did the right thing for their customers and fans and probably prevented a painful holiday season and angry people wanting to return the system not understanding the restrictions. 

However in the release that came out today it also mentions:

These changes will impact some of the scenarios we previously announced for Xbox One. The sharing of games will work as it does today, you will simply share the disc. Downloaded titles cannot be shared or resold. Also, similar to today, playing disc based games will require that the disc be in the tray.
— http://news.xbox.com/2013/06/update

Most of these benefits, which Microsoft touted during E3, shouldn't have to go away for any legal, financial or technical reason. 

Why not allow those that want to install their games on their hard drive do so and opt-in for 24 hr authentication. You could even allow these players to access those installed games on other Xbox One consoles as long as they are signed into their Xbox Live account. I don't understand why it has to be an all or nothing proposition. It's not entirely clear of downloadable games will be allowed to play when signed in to another Xbox One but that should be a no brainer. 

Regarding (Family) game sharing their may be some agreement made with publishers that won't apply if they don't go through with the DRM. Though that doesn't make much sense given the PS3 has a form of game sharing already. The Playstation 3 currently allows users to share downloaded games with up to 3 other PS3's that were bought from a single account. The account doesn't even need to be signed in. However this is not a well known feature and your account has to stay on their PS3, meaning you have to trust them with your account and access to your personal information. One would think if Sony is able to get away with that this generation why couldn't Microsoft still implement some form of sharing themselves. 

Despite the marketing spin Microsoft put on needing consoles connected all the time to "harness the power of the cloud", the new policies shouldn't effect their cloud based strategy. Even with the old policy, games still had to be playable offline (not including online modes) as the cloud is to be used to offload none critical processes. So hopefully we don't hear any back tracking on that front. 

The assertion going around that Microsoft was trying to push the industry forward by adding more restrictive DRM is just ridiculous. 

The main reason Microsoft wanted consoles to connect to the internet every 24hrs is to make sure you aren't using a pirated copy of a game. Piracy and cheating was a huge problem on the Xbox as well as the Xbox 360. Millions of hacked consoles where banded over the lifecycle of the Xbox 360, pinging would have helped stop the need for that.

Secondly, it's business 101 that you can't force people to a more restrictive ecosystem unless you're offering a product or service that is undoubtedly better. For example the leap from CD to MP3 not only had backwards capability but had the benefit of being ultra portable even if you were looked down into iTunes with the iPod. The Xbox One is no iPod. The transition from physical media to digital is happening in gaming, in fact I'd say a large percentage of the market were ready this generation. There just aren't enough to forget about those that aren't ready. If I had to guess, by the 3rd year of these new consoles most games will be bought digitally than from retail stores, especially if publishers ran sales and lowered the price of older games. There's a false dichotomy that everyone has to be online in order for the "Steam" model to work. All they have to do is make it a better option. Provide quick downloads (or streaming while downloading), lower prices ($50?), sales, and easy to use interface and people will flock to digital games as fast as they did for music.