But the thing is, that a lot of people complain about DRM, not the price.  Even for music, a lot of people were begging Apple to remove DRM from iTunes music.  It's a lot about the convenience.  The only thing DRM helps with is with making things more difficult for legitimate consumers.  Let us say I buy a song from my parents computer and use a flash drive to transfer that song to my computer.  It didn't work because of the DRM.  Then awhile ago, Apple removed the DRM from it's music. 

Not many people have a problem with digital DRM, that's not what the "180" was about.  It was about the removal of DRM for physical media.  I can almost  guarantee that Xbox One will have DRM for downloaded titles, so will PS4.  Just like PS3.  A huge advantage with physical media over digital is the ability to give your friends the game to borrow or sell it without restrictions.  I don't know all of the things that MS was going to do, but from the sounds of it, effectively Physical == Digital for Xbox One.  The online check in was the big point for a lot of people also.  Steam doesn't have that, well as far as I'm aware.  Netflix is an odd point...  Netflix is only used for streaming and DVD rentals.  DVDs all have their DRM, but they don't have any DRM that would stop me from going to a friend's house and playing the DVD in their DVD player.  

I've never used spotify though.  

Next Generation of consoles will go all digital if you want, but at this point it's optional.  Every game released physically will also be released digitally.  Already confirmed for PS4, Xbox One, PS Vita, (I believe 3DS might also be pushing for this, but I don't think they have as much as the other 3.) 

I'm not sure you know what diminishing returns actually means...  

Digital copies are stored on physical media, whether that is a disk, a cartridge or even a hard drive, it's still physically stored.  If it's being stored on a server, it can become expensive to hold up.  It costs companies money to keep a game on a server.  Not a lot, but if it's not worth it to who ever is holding the server, they close it.  They could use that space for a different game.  

I can't take a HDD to my friends house if it's formatted for my system.  There's advantages to Physical media, it doesn't take up that much space on a HDD, no download period and it's more accessible in the way that I can take it to my friends house.  On a 500 GB HDD, you could only download a game like Uncharted 3 about 10 times, but I could buy as many physical copies as I want.  I don't think many people fear digital only, it's just not as feasible as you think it is.    

Well, without benV to confirm, it's hard to figure out exactly what the cause was. I did read all his posts during the time, and nothing was really hinting at what the reasoning could be.

That being said, I do think you theory could be part of the puzzle, but allow me to also provide you with some corner pieces.

1. The system for trading in used games required the integration of the windows azure cloud platform into the gamestop functionality. While some members here swore that it must have been free for "trusted partners" (ironic, since gamestop was not to be trusted lol), the very fact that they'd have to alter their entire POS to accomodate for a new network could have been, at the least a hassle, and at the most, costly..not to mention that it's an online database, not an in-store one...which they currently use.

2. The trade in system took a piece of the pie, gave it to devs, and took another slice and gave it to microsoft (for whatever reason) and it also set trade in prices. That's not just revenue they're controlling, it's everything.

3. Two part:
a) The family share as explained by MS reps said you could share unlimited with 10 people. If that isn't a big middle finger to gamestop I dunno what is. That being said, it's hard to believe MS would part with 90% of sales. Just looking at the ps3 share program with 3 copies for friends, was quickly axed in order to fix revenue.
b) The share program as explained by the anonymous AMA program only allowed timed demos. This wouldn't have been a big deal, but like you said, it did direct them to purchase digitally, which might have been a problem for gamestop.

4. The console itself. We heard no details regarding trade-ins and how they could be returned or fixed for that matter.

Now, another thing we know is that the digital program would have given gamestop a pretty big share of reseller market. With mom and pop shops unable to integrate with azure, and ebay and amazon basically untrustworthy for resale, gamestop would've seen significantly more traffic.

What we can deduce here, is that the extra profits from this additional traffic was offset by the downsides, and likely by a large amount. Breaking even wouldn't have been such a concern as to stop pre-orders.
We can't really theorize as to what this variable income would have been, but if we were able to, it could help pinpoint exactly where the problem stemmed from.

I could theorize that the added traffic at lower margins could have played a part, necessitating higher overhead for more workers and upgrades, as well as the loss of freedom to price how they wanted ultimately decided the change of course. Without the azure system, the whole strategy is kaput. It makes a lot of sense then, why MS took away virtually everything they were offering when all us consumers were simply saying "just remove these parts". Obviously, you can't remove parts of it piecemeal if the core system is missing.

You are absolutely right.  Ultimately something went down with Gamestop and they pulled a power play.  MS had no choice but to conceede.  Thing is, if Gamestop wasn't getting a bad deal, MS would have pushed this through regardless of what people said.

I super agree. They had no interest in fixing this for the consumers.

I'll probably get flack for what I'm going to say now, but this is the reason why I have no intention of buying an Xbox One or any future MS console.  They said "FU" to us and the only reason why they backpedalled was because an equal anti consumer company said no, and it wasn't on our behalf.

You mean like Sony is following 360? Kinecteye, paid subscription etc... Sony didn't do anything, if MS did something was to reverse it's policies to the existing ones. You could argue that the Kinect is following the Eye Toy. Still either way this is irrelevant - I was commenting specifically regarding their reversals and them going from being very different from the ps4, to now being verysimilar to the ps4.

MS's reputation is just lower to you folks that don't do business  with them. That's your job, to nag at everything they do although you don't buy from them. Thats just a stupid excuse - we dont do business with themso we dont like them? I dont have a single Apple product but still prefer them to MS. MS is perceived a certain way and while no doubt it will be difficult for them to change this image, they have the money and the pr ability to do this should they want to. 

Sony didn't give a damn about your choices, they left the DRM to 3rd parties and never advocated for their peasants. But you believe in a money making giant corporation, there's nothing I can do about that. Disagree. They listened to how people would react and decided to stick with the current system. And everyone's happy with that. Yep Sony are a money making corporation but they make a much better job of listening to their consumers. And so far they have generally not disproved my trust in them.  

Unhealthy amount of attention from MS in US(and UK). Well, I would've done the same to tell you the thruth. Those are the two countries that treat them for what they are(business company) instead of most of the countries that treat them like American imperial flagship. I know a lot of people in Europe don't buy Xbox because it's "Amurican". Japan, about the same. In 2008,2009 MS pumped the most JRPG out of 3 but didn't move a niquel in that area. You are likely correct about MS in Japan. I would disagree with XB in Europe - the XB didnt do as great there because people over the prev. 3 gens have generally been satisfied with the PS consoles AND because the XB didnt have many games (other than Forza) that catered to them. You are right about focusing on key markets but Sony simply seem to be better at including various regions/countries with their  consoles.

X1 is the most ambitious console out of the 3 and it makes sense for MS as they didn't just want to upgrade their graphics card(like the competition). Ambitious yes, smart clearly not. 

You have to be mentally unstable to trust a corporation that is trying to make money. But I like MS the most out of 3 because they're not scared of making choices and games that I like.
They're natural leaders and not "Mr me too".

I'm very excited for Illumiroom, the goggles thing and to see how Kinect 2.0 will fare this time. And Killer Instinct.