Definitely the DRM fiasco. It might seem like the forced Kinect is worse right now, but if they'd gone through with that DRM bullshit, the thing would have flopped worse than the Wii U, Vita, Dreamcast, or even the Virtual Boy. After investing a billion dollars in games, for a flop like that to happen, Microsoft would have left the video game business. They saw that it was a mistake and fixed it in time, but some damage was still done. The forced Kinect definitely sucks, but it's not that big a deal, just as a forced Gamepad isn't that big a deal for Wii U. Once the Kinect and Gamepad start being utilized better, no one will care. DRM as a concept isn't even bad. If there's physical retail management, then there should be digital retail management. The way Microsoft choose to execute that, however, was draconian and tyrannical, and the fact that they even considered it did irreparable damage to the brand.
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