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Today I will be using generalizations, making wild assumptions, and backing these with other baseless facts and opinions from sources that I may have imagined. If you've got your tin-foil hat close by, please feel free to follow along.
It's fair to assume that you or someone you know has recently been affected by the latest ban wave by Microsoft. I had heard earlier in the week that the number had reached 600,000 in the United States alone. Destructoid has been kind enough to inform us that we're looking at a solid one million count. For those not familiar with the ordeal I'll provide a little back story. The firmware mod community likes to refer to a cat and mouse game between themselves and Microsoft. They develop a firmware fix to burn Xbox games, Microsoft changes their DVD drive or updates software, and the community answers by using the latest fix once again. In addition to updating software and hardware, Microsoft responds with bans, usually occuring in large waves. These bans only affect your console. They do not disable your Xbox Live account, or affect your hard drive directly. As of recently they disable your ability to write games to the HDD, retain achievements on profile migration, and the use of Windows Media Center. So the solution to a console ban has always been to get your hands on a new Xbox 360. As we transition into a new age of console gaming there is a large market of PC gamers who are acclimated to simply not paying for content. When presented with a choice between the newest generation of consoles it's absolutely appealing to purchase an Xbox 360. The firmware flash uses a connection that most computers have and instructions are readily accessible if you wish to look for them, or have a friend familiar with the process. As an indication of how accessible the mod is, simply take a look at the number of bans. Now, let's sit on the other side of the table and wear Microsoft's expensive shoes;
We know this market exists in which there are simply those who will not pay for our titles. There must be a way to make money here, right? Absolutely. The product is left with such large vulnerabilities that could potentially be addressed. But what would really be the point when we generate a questionable margin of sales from these individuals based on the ability to mod? Microsoft has already made their money when that console was first purchased. The sale of titles is an incentive mostly for the developers. And the bottom line is that people who don't want to pay for games, won't pay for games if there's a way around it. When faced with piracy all Microsoft needs to do is ban your hardware. They assume that as a consumer your only other contribution is Xbox Live. So if they want to make more money, they push you into a position where you're going to want to invest in their product again and drive their sales. Now if you're asking yourself, "why would any of those pirates be so foolish as to crawl back to Microsoft?" I would answer you with another question; "How much do video games cost these days?" Anyone caught in this position is going to consider how much money they are not spending on games. If they purchase a new console, five releases later they have recouped their investment and are right back to playing with friends. It can be a little difficult to escape from that logic trap. Now we move on to the dirty bits; Bans are withheld until they can drive sales. Most large ban waves have occurred around when holiday and fourth quarter sales are upon us. Your best titles are being released, prices are being marked down, and everyone is ready to spend. This is an excellent way to ensure you're inflating your numbers at just the right time. Because... Console sales will get you exclusives. Developers understand that their games are being pirated. But that underlying concern is put to rest at the potential of reaching a larger market. When you can inflate your numbers through new console sales due to failed hardware or bans it makes you seem impressive. Especially when numbers are being thrown around claiming the console sits in the homes of 60% of families. Not everyone is banned. In the past, bans have consisted of a portion of the actual modder community. You could always find proof that some genius who had been playing with non-stealth firmware a few weeks prior with an unreleased game was still enjoying his Xbox Live. Many would go through the rigors of testing their ripped games, updating the firmware, and staying offline only to be greeted by the hammer. This, coupled with the fact that bans would come in waves over a few weeks, always left a bit of confusion to the process while giving a false sense of security. What this tells the community is that it is still possible to cheat the system. If you get that new Xbox 360 you'll probably be fine until next year. The ban wave will end soon anyway. MS detects the firmware. This time around everyone was assured that they would be fine so long as they played it safe. The firmware could not be detected, right? Wrong. A gentleman running a business in Mexico quickly proved that a console with the newest firmware mod, without playing any burned games, could be banned as well. Information collected showed no pattern at all aside from the fact that these bans affect all 360's with modified firmware. While some remained safe, it was clear this was going to be the largest ban to date. Given Microsoft's habit of intentionally withholding bans to create false hope, there's nothing to say they couldn't always detect the firmware mod. Following the discovery, panic and bestiality ensued. Was this the end for everyone that wished to play a modded console online? No, the community perpetuates the cycle. As if on queue, the developer of the modded firmware steps forward. It appears everyone was right, most all consoles will be banned this time. But don't worry, there is hope. A new firmware is being developed that will not only evade Microsoft's detection, but is indistinguishable in all aspects from standard firmware. With a catch, of course. This firmware is only being developed for the new DVD drive Microsoft began putting out recently. As of August '09 the drive had been considered unmoddable. This of course means that if you want to replace that Xbox 360 there's little hope of finding a used one to work. You will be looking forward to making a new purchase and driving up sales for this quarter and holiday season. Be on the look out for a huge spike in Microsoft sales over this week and the following. While it will certainly be attributed to the holiday season, know that a good portion of those one-million banned are giving their money right back to Microsoft. Thank you for the piracy!
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It'd be interesting to see a cost analysis that contains information on amount of money made per console sale versus how much money was used to develop the modded firmware detection, develop a plan of action, deal with the rise in support costs for calls/emails because of false positives (if there are any) or people not understanding why they're banned legitimately, etc.
It'd be curious to see if they actually come out on the plus side money-wise in a straight banned console swap for a new one. I doubt they do, which leads me to believe that this is simply punishment driven.
Because the modification to be able to use pirated copies of games was fairly simple, it lead to a large number of modded consoles. Since the detection and response was carried out fairly easily as well, I think it's safe to assume that a not insignificant portion of the modders will think twice about doing so again (especially since the number is quite large, over ONE MILLION!). Out of this portion that will think twice, many of them will probably be purchasing a new XBOX, and having thought twice might start to legitimately purchase their games. This is what I think Microsoft is banking on, converting the pirates.
So while I agree with you that bans were withheld so they could do their whole shock-n-awe wave here, I disagree with their presumed motive.
- Break their console in more than one possible way = more sales
- ban their xbox if they tamper with it = more sales
- strip out features that should be included in the box and sell them for more money = more sales
- Use Microsoft points to confuse the consumer and think its fun to buying points = more sales
- Don't fix the console and offer 3 year warranty. After 3 years you will have to buy a new one = more sales.
- Charge per year for XBL to continue making more money from gamers = more sales
Brilliant, truly brilliant.
Microsoft was losing around $76 dollars (don't trust my memory) per unit sold until some time in 2008 where they broke even. Now it's moved on to profit. The only console that was actually making money out the gates was the Wii.
@Crunshiii
You're right. Their marketing is full of brilliant assholes.
That's exactly what I was thinking about this situation. It's a good point that sales will give them exclusives, because piracy is one of the reasons 360 sells so well. If Sony wouldn't go for BluRay, they would sell more consoles too, but what they did is better for gaming industry. But I think they knew the risks. Some more time will pass and Sony will lead.
We'll see for how long Microsoft's ring-buoy, which is Natal, will keep them from sinking.
People who buy and own console games will experience an inevitable failure of the console. That turns their asset (the games) into a sunk cost.
Sunk Cost Fallacy is part of economics, business, marketing and psychological studies (and many others). It is a bias of the human mind all humans make. You have to be educated and train yourself out of making it. Manufacturers design marketing, product purchases, dlc and maintenance in order to maximize the potential for cognitive error in their customers.
The games become worthless on a set schedule decided by and known to the manufacturer. Rarely to the public.
Now, thanks to the efforts of the Califorinia Supreme Court we know roughly 1 in 2 X360's fail within the first 2 years. Compared to 2% PS3. I still have no idea what Wii failure rates are.
You really need to know when do the other 50% die to do a precise range for what it costs to continue playing the same game longer than 2 years. But at least you have an upper range established.
It's the cost of the year zero purchase + the cost of the year 2 purchase x the .50 failure rate.
As for people who burn and mod only to be able to play 1st player games, they have accepted restricting the maximum utility of their console (multiplayer) for the value of escaping the Sunk Cost fallacy.
As they have not purchased any games they are free to purchase any games console of their choice once their Xbox360 red rings. This assumes a rational choice based upon future known or knowable costs. However gamers have been known not to do their homework and behave in irrational self destructive ways.