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Xbox rumors of ban on used games spark complaints, fall in stock prices

Following rumors that Microsoft's next generation Xbox console will not allow users to play cheaper used games, video game reseller GameStop suffered a fall in stock prices while the internet erupted in outrage and speculation.
Call of duty 03 20 2012Enlarge
Actor Nick Swardson attends First-Ever Call of Duty XP at the Stages at Playa Vista on September 3, 2011 in Los Angeles, California. (John Sciulli/AFP/Getty Images)

Microsoft’s next generation Xbox console will require an internet connection to operate, forcing Xbox users to play only newly purchased games instead of cheaper used games, gaming news site Edge said.

Microsoft declined to comment on the story, calling it a rumor.

“We do not comment on rumors or speculation,” David Dennis, a spokesman for Microsoft, told Bloomberg.

“We are always thinking about what is next for our platform, but we don’t have anything further to share at this time.”

Michael Olson, an analyst with Piper Jaffray Cos., also told Bloomberg that the report was inaccurate. 

“We are confident that both the new PlayStation and the new Xbox will support used games,” he wrote in a research note.

The report’s accuracy almost seems beside the point as the speculation over used games being forced out of the market is already affecting the gaming industry.

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GameStop, a company that takes in half of its profits by selling used games, is already suffering some consequences. 

After the news broke on Wednesday, GameStop’s stock price fell six percent closing at $25.50, down $1.61.

While GameStop was skeptical of the report’s accuracy, the company released a statement and sent a clear message to Microsoft and other gaming console producers that without the option of playing used games, demand for the next generation of consoles will fall. 

“GameStop cannot comment on market speculation or rumors about the specifications of a third party’s products. However, through surveys and feedback of our PowerUp members, we know the desire to purchase a next generation console would be significantly diminished if new consoles were to prohibit playing pre-owned games, limit portability or not play new physical games,” read the statement. 

GameStop boasts more than 21 million PowerUp members, over 30 percent of the entire console gaming community, according to Bloomberg

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Paul Tassi, a contributor to Forbes, stated that a moratorium on used games would sound the death knell for the console industry. 

“Many, many people primarily buy used games for their systems, due to the fact that they are often significantly cheaper than new copies. Many would probably not play video games at all unless they could get these titles for cheap, or sell back their own games to help pay for new ones,” he wrote. 

Across the internet, forum posters expressed outrage and echoed Tassi’s sentiments.

“If this is true I'm done with console gaming. What am I supposed to do with my console if my internet goes down? What if I want to borrow a friends game? What happens if I want to buy a game they don't make any more on disc months down the line?” wrote one Reddit commenter.

“No dice Microsoft. Loved the Xbox and the 360, but this would be line crossing,” the commenter added.

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Other posters saw a potential ban on used games as signs that the console business is scrambling to maintain normal levels of profit.

"The plain, simple fact is that game publishers think they have found a convenient scapegoat to explain away the continuing failure of their utterly broken business models. They can point to GameStop game profits and say, 'they make a lot of money from used games, and we make those games, so we should be getting that money.' It's a convenient lie, but one that only works so long as you ignore the rest of human history," wrote one poster on NeoGAF, a well-known gaming forum often frequented by game developers and industry insiders.

The next generation Xbox release date remains unknown but industry analysts expect most next generation consoles to launch in the next holiday season. Until then, rumors and speculation surrounding the used games market will likely continue. 

http://www.globalpost.com/dispatches/globalpost-blogs/the-grid/xbox-rumors-used-games-ban-gamestop-stocks