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Why Xbox One's used games policy doesn't need to be the end of gaming as we know it

commentary Before you start panicking about next-gen game licensing, you need to put things into perspective. There's a way through this.

James Martin/CNET

Last week, Microsoft finally provided some additional information on how the "game licensing" policy will work for the company's newly introduced Xbox One. It was our first peek behind the curtain on how discs, digital downloads, game sharing, and Xbox Live accounts will work and interact on the upcoming game console.

The new policy explicitly states that the new system was designed so that "game publishers can enable you to trade in your games at participating retailers." But reading between the lines of that lawyery language, most gamers took that to mean that the aftermarket for the buying and selling of used Xbox One games was dead on arrival.

The howls of outrage and calls for boycotts began immediately.

Why the unprecedented wave of righteous indignation? Is this truly the end of a way of life for gamers everywhere?

Well, yes. But that's because we've been living in a transitional age. One with a loophole in the form of shiny silver discs.

In reality, that's what the outrage is all about: the closing of that loophole. One we've taken for granted for 30 years. I can sympathize with that. We've had it pretty good up to this point. But believe me, if the technology existed in 1985, there is no way on Earth that Nintendo would have allowed you to let a dozen of your friends borrow your copy of Super Mario Bros.

Why? Because each time you lend the game out to a friend, it's money lost for the publisher and, more importantly, the developer. And ultimately, that's not good for the industry.

But gouging the customer isn't a solution, either -- and that's what many gamers feel is happening if the subsidized economy of game resales is shut down.

Physical media's last gasp
We've all dealt with the digitization of most of our entertainment. Carrying around an MP3 player is better than switching discs out on a portable CD player. Reading your Kindle is easier than lugging around hardcover books.

All of these conveniences have come at the expense of physical media. But because video games operate with much larger file sizes, they have remained on the outside looking in when it comes to digital distribution. The idea of physical ownership has evaporated into owning a license, which has become the way we symbolize virtual possessions.

That's what your e-book library is: a collection of digital licenses. And your iTunes collection. And your video collection. All that stuff in the cloud? Licenses instead of discs. And the gaming industry is just finally catching up.

Let me be explicitly clear: I am not defending money-hungry corporations that want to turn you upside down until moths fly out of your pockets. But I do think we're overlooking the developers who create these works of art for our playing enjoyment. I want them to feel that their work can be supported through the empowerment of gamers. I want them to be able to measure that.


Winners and losers
So who loses out the most in the evolution of licensing? We all do, but maybe some more than others. The "binge and resell" gamer will probably feel it the most. This gamer will finish a title in a weekend, then resell it at a brick-and-mortar store -- or an open marketplace for a better return -- and get a maximum value for a nearly new game.

Who else? Gamers who rely on buying used games. But this might be fixable. Each game has a diminishing value the second it's released -- and in the case of used games, opened. In an open market that price fluctuates, where at a chain retailer it's predetermined. (Just think how most new games are sold as used for $5 below full price.) The gradual lowering of the game's value in the open marketplace is something that can be adopted into the new dynamic pricing structure of Xbox and PlayStation's digital stores. Just like the way Tomb Raider (released in March) is now sold for $45 used, so, too, can the official Xbox One pricing be in its digital store.

Here, the middleman reseller is bypassed, and the money is going to the makers of the game -- or at the very least, headed in the right direction.

Steam's all-digital success story
My biggest problem with the bandwagoning and witch-hunting that's been floating around is double-sided. First off, we don't really know the full story about PlayStation 4 and its policies regarding licensing, so the angst aimed solely toward Microsoft might be unfair. The playing field is still open. Second, a lot -- but not all -- of the core elements of the licensing system Microsoft is outlining for Xbox One are similar to Steam.

A word-of-mouth hit with PC gamers, Steam has managed to develop an overwhelmingly positive reputation with gamers thanks to its frequent sales, ease of use, game management, empowerment of its loyal community, and support for the independent gaming scene. It's owned and operated by Valve, a developer responsible for franchises like Half-Life and Portal.

But where there are similarities in structure, right now there doesn't seem to be much congruity in philosophy with Valve's game distribution platform. That imbalance is manifested primarily in one of the most important elements regarding all of this: pricing.

Sarah Tew/CNET

Flexible pricing is what has made Steam a PC gaming haven. I recently bought every single Grand Theft Auto game ever made on Steam for under $15 -- total. That's spectacular. Sales and deals can revive catalog titles, and make them attractive to a new group of consumers. And publishers can get revenue they'd otherwise miss out on: 100,000 consumers paying $10 for an older game beats out 10,000 paying $60.

How to get gamers to stop worrying and love the Cloud
As my colleague David Carnoy recently explained, the "value" of games is as much about psychology as it about economics.

As Carnoy pointed out, if used games can't be resold, they're "worth" less to the buyer. If Microsoft and Sony want to appear that they're in this for the gamers, they need to address that value discrepancy. And following Steam's model is the best way to do that.

New games are going to cost the most, I get that. But surely the money saved in not having to manufacture and ship physical media can chip away at the price of a game. Better yet, incentivize game buying. Offer digital punch cards. "Purchase three Xbox One games and get 20 percent off your next." Offer weekend sales. Bundle titles together. Give us reasons to get excited about browsing an online store, the way it is when discovering a great deal on Steam.

Meanwhile, there are other elements of the Xbox One game-licensing policy that are undeniably positive. First, up to 10 family members can use your account regardless of which Xbox they're on. Second, some disc games will be able to be loaned to a friend for free as long as that person has been on your friends list for a month. If you want to bring a game over to a friend's place, you can log in on his system and download it.

You'll have all your games no matter where you go. As long as there is an Xbox One, you'll have total access to everything you've purchased. (You know, just like Steam.)

The point is this: this new world of gaming doesn't have to suck.

No, we can't have our cake and eat it, too. I read a lot of enthusiast sites crying about how the shift away from used games is a crime against the culture of gaming, but they ignore that the switch to digital is simply another evolution of the medium. A lot of things have changed in 30 years.

There's a stench of hypocrisy that emanates from a class of gamer who demands progress on every level from a new console, yet belligerently revolts at the discovery that games won't be delivered on plastic discs any longer.

The funny thing about Steam is that no one complains about the lack of discs, or the dearth of game lending and reselling. That's because its convenience and affordability trumps any downsides.

If Microsoft and the game publishers follow Steam's model and create a more dynamic digital marketplace, the death of used games will be a small footnote, not an epitaph.

It's a big if. But one that could well determine the success or failure of the next generation of consoles.

Join CNET and GameSpot for live coverage of Microsoft's E3 press conference on Monday at 9:30 a.m. PT/12:30 p.m. ET.