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Will Microsoft Corporation's Reversal of Xbox One Policies Stunt Video Game Industry?

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The decision was the obvious move to satisfy fans, but the video game industry's progress could be hindered. Here's why.

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As wholeheartedly and improperly as Microsoft Corporation's (NASDAQ:MSFT) Xbox team defended its new console's always-online requirement and game-sharing regulations, the overwhelming cry of the people finally proved too loud to ignore Wednesday afternoon.

In a letter from Don Mattrick, the president of Microsoft's interactive entertainment business, it was announced that the Xbox One will no longer need to connect to the Internet every 24 hours in order for offline games to remain playable.

Additionally, plans to require users to pay a fee in order to play a used game were scrapped. Gamers may now share or sell their used games the same way they always have.

For a company like GameStop Corp. (NYSE:GME), which purchases used games and resells them at a significant markup, this reversal by Microsoft lifts a huge weight off of its shoulders. Had the console manufacturer gone forth with its plans, the market for used games was set to become a fraction of the size that it currently is.

For video game publishers like Electronic Arts Inc. (NASDAQ:EA) and Activision Blizzard, Inc. (NASDAQ:ATVI), however, this is an unfortunate turn of events. When a user sells a used game to GameStop or shares it with a friend, the publisher of said game has nothing to do with the transaction and sees no profit from it. If Microsoft had stayed the course, it is very likely that these companies would have seen a new source of revenue, as the "unlock" fee to play a used game would be, at a minimum, partially paid to them.

While other companies may feel the waves from Microsoft's decision, it was one that needed to be made given the extent to which fans rebelled. A Facebook poll concerning preference for Xbox One or Sony Corporation's (NYSE:SNE) PlayStation 4 put in place by Amazon.com Inc. (NASDAQ:AMZN) was taken down June 16, four days before its planned removal, due to the sheer one-sidedness of its results. With just over 40,000 votes placed, nearly 39,000 had been cast in favor of Sony's product, as a result of Microsoft's policies and its $100-greater price tag.

The customer certainly knows best in this case, but by reverting to policies essentially echoing those of the Xbox 360, Microsoft had no option but to cut out some of the futuristic features its restrictions allowed for.

Plans for games to be downloaded to the Xbox One's hard drive and then be playable without a physical disc in the console's tray are no more. This means that members of a family that purchases a game will no longer be able to play that game, without a disc and in multiple locations, at the same time.

Without the always-online requirement, users will also be stripped of the many advantages that constant data streaming and access to the cloud could provide.

Microsoft's vision for the future of video game consoles is now far from what it was just two days ago. Unfortunately, this change of plans occurred too quickly for it to be determined if Microsoft's vision for the future was the proper one.

It seems as if Microsoft leaves no gray areas for those who took no issue with the original policies and intend to opt for the always-online option. Features that were planned when this option was mandated will no longer be available, thus their benefits will not be explored during this generation of consoles, or at least for the time being.

Such a massive pre-launch change in policy coming from a company as big as Microsoft is truly commendable. No policy changes, however, will address Sony's serious undercutting of the Xbox One's price. Microsoft has made a move, but for now, the ball is still in its court.

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