10 years from now we will all be like "remember when we fought the great internet war with xbox in 2014?" while we load up a digital game on our diskless consoles.

oops.. Cant edit my previous post for some reason... I meant 2013, not 2014 :P

Microsoft did not intend to make Xbox One a dedicated gaming machine. It was supposed to be a multimedia device intended to take on Apple and Google. This is evident by the fact that Microsoft had opened Xbox Entertainment Studios and the way they presented the console prior to E3 2013 was multimedia-focused. The restriction of used games was most likely done to appease third parties.

The direction of Xbox One was still very much unfocused. Microsoft decided to have a console that was always online and banned used games but they still insisted on using discs. Why? They would have no value as soon as they were used. Microsoft showed they had a contempt for retailers by not allowing used games but at the same time, they still felt the need to appease them by sticking with physical media. They were trying to pass off Xbox One as something new even though it wasn't doing anything that wasn't already being done. Finally, if Kinect was so important, why treat like an accessory? Why not just have it built into Xbox One?

IMO its because games are something that can be controled(unlike your dining table) and is more expensive than anything else that is digital. It works both ways though. Publishers see it as we are losing x amount of profit on a $60 game wne resold. (Many) Consumers see it as, Im not going to pay you $60 for a digital game that I cant trade, lend, etc. If the car makers and table makers could get a cut of your used purchases they would.

I have grown up with gaming as well, but the industry that was once owned by gamers and computer enthuiasiasts is now owned by stockholders and businessmen. The people that run the gaming industry dont care about games or gamers(many have likely never played a proper video game) just the amount of money they can take from them. Indys are what the gaming industry was, but they will never have the resources to put out anything near what the businessmen do.

I think the reaility is the policies were as they were because of the time frame Microsoft had to development them.  It would appear, based on the info recently released from the SDK leak, that the Xbox One development started in earnest in August of 2012.  My guess is, Microsoft had objectives for their next console, but they didn't develope those objectives into clear and coherent processes.  In the end, the policies were the result of rushed planning and development.

Microsoft, at the time, had the capability to offer a better option for DRM, but it seems clear to me that what they did was opted for what they could implement the quickest.  They already had a DRM implementation in Games for Windows  similar to what they had proposed with the Xbox One originally.  So likely they were shoe-horning it in.   

The reason Kinect was mandatory was simple, because it adds value to the system.  The fact that it is used to identify and log-in users automatically as they present themselves and to identify the current player or the player tied to a specific constroller.  The Xbox One controller was designed in conjunction with Kinect and the player identification.  Hence the problem that has since arisen with having to implement a Kinectless means of identifying the current player with a specific constroller.  In addition to player identification, Kinect is a key component of the voice navigation system, and single input implementation.  All things Xbox One were designed around.

As for Gifting, you don't understand the intent of gifting.  One of the desires on the Xbox 360 was the ability to buy a game for someone.  For example, say I have a friend and I want to gift him a game I already own so we can play the game together.  With the Xbox 360 there was no way to do this.  With the Xbox One, Microsoft intended to offer a means of doing it.  Gifting shouldn't be confused with the Family Share plan that Microsoft was intending on implementing.

The Family Share plan was actually a pretty decent policy.  A user could set-up multiple groups up to 10 users each, that they were able to share games with.    In theory, if every user possible was in a unique group, you could have 100 different groups sharing the same group of games or a mix of games.  Right now it's essentially the same as it was with the Xbox 360.

It wouldn't necessarily have cut down on game rental services.  It would have negatively impacted disc-based game rental services, but it would have opened the doors up for an online game rental service. 

The evidence, to me, seems clear that Microsoft was rushed to decisions by Sony's announcements.  I think they expected more time to develop their ideas both on paper and in code.   As even the permutations of the UI over the past year have demonstrated. 

Could Microsoft, as Sony did, release a console that didn't offer any significant differences in feature set from the previous generation as they did with the PS4?  Sure.  The desire behind the Xbox One was to fundementally revolutionize the gaming console and the industry.  The problem is that Microsoft saw their vision, and not the realities of that vision.  In otherwords, they looked down the road to where they wanted to be, and not where they were starting out as.  The realities of that is, what they had developed wasn't ready for public consumption. 

I don't see it as nepharious as others, even you, seem to want to present it.  The industry, and some consumers, recognize that there are two negative issues that impact the industry.  Second-hand sales, and piracy.  Second-hand sales are possible with digital or physical media games, Microsoft would have to be able to develop a system to allow it.  That is, the ability for a user to remove a licensed product and transfer the ownership of it to a third-party and they had the ability to resell it.   It's possible to do, just not possible in less than 12 months to develop a fully operational system.

I like your post (even if I didn't like M$'s policies when it came to DRM).  Very informative and well thought out.  I wonder how things would have played out if M$ had their way.  I personal love the Xbox One and it's the little things--especially the Kinect integration--that make me like it.  We are opposed to change by nature but I sometimes think the orignal plan may have been a good one.  Especially when you consider all of the companies that went out of business last gen....

Being the lowest selling console of the generation, with a 1 year head start, and only really selling anywhere close to PS3 because Sony shot itself in the dick by pissing off the customer base (which should have been an object lesson for MS going into gen 8, which they clearly did not learn) made them arrogant?

Hell I hate to think how arrogant they would become if they actually did significantly better than the competition. One good reason to hope that never happens. The shit they would pull if they became as market dominant in consoles as they are in PC. *shudders*

World domination...Mwuahah...mwuahhaha...mwuahahhahahahhaha

Nothing particularly instructive there as far as I'm concerned. It's simply incompetent of MS to not have been fully planned and scoped for a gen 8 console launch in 2013. Shit, we got the Wii U in 2012 (as bad a product as that has ended up being from the consumer perspective), that should have been a sign, and 2005-2013 is a ridiculously long generation cycle for the modern console era.

It is a ridiculous notion that used game sales, rentals and sharing drove companies out of business last gen. That's just an excuse publishers want to trot out so they can pretend the fundamental brokenness of stupidly large game development budgets doesn't exist. The fact that Tomb Raider 2013 is the best selling Tomb Raider game since the turn of the century, better selling than every single Tomb Raider game on PS2, and yet Square Enix was disappointed with its sales because it failed to make a profit until the HD upgrades came out for PS4 and Xb one has exactly nothing to do with used game sales, game rentals and game swapping. They spent a stupid amount of money on making the game, which for all that it is a really good game there is nothing technically amazing about it (i.e. I can't see where all their money went), and then complained when they struggled to make that money back.

I think if there had been more time.  Let's say a 2014 launch instead of a 2013 launch, then Microsoft could have made a solid case for digital distribution.

There still would have been a loophole for an off-line system to work, however I would have to question how many Xbox Ones are used offline to date?  But an online system could be limited to checking-in only once per event.  So, if the software was installed or a change, such as DLC added, it could verify that ownership was legitimate and that particular piece of software was untouched and untainted.  If not, it could then, easily, disable the software or the entire system (as per a Microsoft patent).  However, considering the number of consoles sold that are connected online, I don't think it unreasonable that when the console connects, when the user logs on, that a handshake exists where the legitimacy of ownership is checked.  It would be unobtrusive and behind the scenes.

DRM is simply a database of software licenses that a particular user has purchased.  There's a bit more to it than that, but a system can exist that allows a user to dictate whether they still want to own that content or not.  It could easily be done.  The challenge is, if a user's account gets hacked, then how do you deal with such transgressions?  Microsoft could roll-back any transactions through the support center, or make some changes perminant versus others being temporary.  For instance, if you walk into a GameStop, handing over a disc with a game on it, that license is read, and pulled from your account and freed up to be assigned once again.  A tool could be designed to allow a retailer, such as GameStop to even verify the claim of ownership.  For instance, if John Doe walks in with Call of Duty: Advanced Warfare Black Ops MLXXXIV, the system could pull-up who currently has that licensed to them (Jane Decker), and the retailer could then determine if John had the right to relinquish that license, or if Jane and John had to complete their business transaction in a different way.  For instance, Jane gifting the game license to John or permitting John to request a license transfer from Jane and Jane authorizing it. 

In this way, ownership can be preserved, regardless of whether or not the ownership was derived from a physical disc or downloaded purchase.  This prevents someone from stealing a physical disc and exacting ownership.  It also allows both Microsoft and the authorities to track theft as well as piracy.

It also wouldn't inhibit renting, but infact expand options for rentals.  Since each game would have a unique license embedded on it, whether a game is disc based or downloaded, the lending provider could, with a tool, assign a license to a particular user ID for set period of time.  Once that time expires, the game could become nonfunctional, demo only, limited demo, and or available for purchase or rerental for that user.  Even if it's any amount of time after the rental.  So if I want to buy the game, I just indiciate it and a new license is transferred to me.  If I want to rerent the game, then my license is renewed for the set period of time.  If after the period of rental, I elect to rerent it and the game license I used has already been licensed to someone else, the retailer could offer a new license from its catalog of licenses or if none are available put me on a wait list.

Such a system would facilitate library lending of games, where a library system could permit game lending via digital media.  So through an app, I go to my library, select a movie, music album, or game to check-out.  I can elect to check the materials back in, or I can elect to renew my copies.  If the license expires and someone's on a wait list for those materials, they can immediately have access to them if I haven't renewed them.  They could have been downloaded in the background while they waited for the items to become available. 

Again, a well thought out system that addressed the needs and possibilities that presently exist could have made a system as tennible as the one that presently exists without any major intrusion.  There certainly would be some changes to any system people utilized.  Trading in a game would be different and it would definitely negatively impact GameStops business or any other business engaged in second-hand sales.  But considering GameStop was just found out to be reselling improperly repaired Xbox 360's as functioning units, I'm not sure I care if it harms their business or not.

Nevertheless, workable.  This was how I imagined the system could work, from the time they announced it until the time they decided against it.  The problem is building such a system, it would take time.  Not only is there software, but defining policy and procedures for retailers to follow.  Getting retailers to accept the business model and assure them that the impact to their business model will be limited and short-lived before it rebounds. 

The biggest problem for third-parties is that they aren't necessary in the ecosystem if Microsoft built these systems.  Microsoft could duplicate the system to fit entirely within its eco-system if they wanted.  However, they'd offer those eco-system features as a goodwill service to both the retailers and consumers.  One challenge with that is that by working with GameStop on a trade-in program, they would be legitimizing and supporting GameStop's business model.  If GameStop found a way to exploit the system for profit, Microsoft might have to accept that.  Or if a library lending service became more popular than rentals or purchases through Microsoft or other services, then they would likewise have to accept this fact of life.  Things may not bare out the same profitability of if they elected to do it all themselves.  They'd spread out some profit to other retailers, and in some cases lose profit completely.