We all know that gaming is going digital. Its inevitable. If a gaming industry company refuses to see that now or isnt beginning to take steps towards that then they will be behind the others. We see digital games having huge sales and profits. People like easy accessibility and best value. Personally like many others it will be a sad day when physical media dies. For me its the nostalgia and deeper ownership of it, but its where its all going.
Businesses come and go based on consumer demand. Its about what the consumer is buying and wants. Many traditional gamers like myself don't like seeing physical media becoming more and more a thing of the past. But digital entertainment is faster, immediate and more accessible in almost all cases. The young generation loves to just get on their smart phone and start playing their favorite digital library of games immediately. We see Steam becoming more and more popular. The younger generation are becoming more and more multitaskers and want immediate entertainment.
The problem with all this is that MS has had piss poor PR to deal with this. Sony noticed and therefore took full advantage with brass knuckles to MS's exposed groin. Does this PR flop hurt them? Right now yes to an extent, and if they can't fully combat this and explain to gamers/consumers why this system will actually be very advantageous then their sales will falter some come launch. MS isn't dumb. They were surely unprepared in having a response to the back lash, but now they know how big it is and Im sure are calculating their moves before launch to turn it around.
They created a system ready for the digital reality that is coming. And they are trying to implement policies now so that it won't hurt so much down the line when they would have to suddenly change policies during the middle of their console cycle when people are used to a certain policy standard for their current console.
Essentially MS is letting the community stab them in the butt with a steak knife now rather than putting it off and then having the community stab them in the gut with a dagger later. With releasing a new console they know they need to set policy standards now for it. Making big changes in policy to a console a few years after release will only piss off all the owners who were used to the previous policy even more.
They know where consumer demand is heading. They are preparing now for it. Sony is trying to as well, but it sounds like they are choosing to wait until later...either that or they are just trying to be as misleading as possible to save face and use this opportunity to get a higher install base out of the gate.
MS has even stated that their past systems were more static and so the need for new console generations was the norm. During the interview with many of the console lead designers they stated that this console is not going to be static. Its going to be a dynamic environment and more permanent. They are trying to make this console their last. They envision by the time that normally a new console generation comes they would not need to release any new hardware. This is because of it being always connected to the cloud. Game processing will become almost completely handled by cloud servers so that graphical capabilities are no longer capped by the console's internal limits. Thats basically what the Xbox One lead developers are saying guys.
This is where gaming is headed. In time there won't be a need to upgrade hardware. You will have a box that handles basic things and most of the processing for games will be handled by ever increasing powerful servers.
Sony see is too. Its a big reason why they purchased Gaikai. Im sure they are just being coy about the realization of where physical media is headed even on their platform. Either console makers at some point will accept the change or they will close their doors.
Its all about consumer demand and immediate, powerful yet simple entertainment.