Since the inception of the Xbox platform, Microsoft has sought to take over the living room and be the single set top box for TV’s all over the world. Their quest for supremacy of the living room began in November of 2001 as Microsoft took on the Nintendo Wii and Sony PlayStation 2. The battle was over before it started with Sony dominating both Microsoft and Nintendo to win the generation of gaming. 

Microsoft wasn’t content with just releasing a console–they wanted to change the way consoles connected to consumers. To do this, they announced Xbox Live at E3 2002 and released it, to consumers, in November of 2002. This service provided fast, online gameplay with players throughout the world. Though Sony had a system that allowed both broadband and dial-up connections, Microsoft was for broadband users only.

Back in 2002, the United States was still full of large packets without any broadband service available. In fact, while the lack of reliable broadband coverage has increased, it is still far from penetrating all areas of the country. During my time with Microsoft, at E3 2002, I asked them about if it was wise to split their users who wouldn’t be able to use this new broadband only system known as Xbox Live. Their response is something I will never forget. The Microsoft PR representative told me, in front of a group, “We feel people will move in order to play Xbox Live.” My jaw dropped at the arrogance of the statement. It was like they had rehearsed such questions and the response looked down upon those who could live in such an area.

The original Xbox Live was a complex system that lacked a nice interface and was complicated to communicate with friends. Microsoft remedied this with the release of the Xbox 360 in 2005. Looking to finally gain some traction in the gaming industry, they went all out. Microsoft created wonderfully simple tools–to make developing games on the Xbox 360 easy, put Xbox Live as a backend interface to the new console, and created partnerships, most exclusive, with most of the best in the game industry throughout the world.

As Microsoft iterated on the Xbox Live platform, it quickly matured into something Sony spent the entire generation trying to catch up to with the PlayStation 3. The arrogance, of Microsoft, continued into this generation. It began with Microsoft purposely releasing a console that was plagued with heating issues. In fact, all original Xbox 360 consoles released, until the redesigned Xbox Slim, will fail. It is just a matter of when.  This is a well documented fact that Microsoft, in their arrogance to be first out of the gates, knowingly released faulty hardware.

To make matters worse, after securing a large lead, they let virtually all internal studios leave.  Exclusives, on the Xbox 360, became gimmicky games based on the Kinect motion sensor platform. These titles failed to give any incentives to the very hardcore gamer that made the Xbox 360 platform successful. Microsoft, instead, elected to reach out and develop games and applications for a casual market. Hardcore Xbox fans still stood by their console even when their First Party Software began to fail them. Surely they were just leaving stuff for the next-generation, right?

Word began leaking about a next-generation Xbox about a year ago. Code-named Durango, the new console has been long-rumored to be called Xbox 720. Since those early rumors, we have learned several details:

Sources from unnamed development studios have stated that the new Xbox hardware has built in DRM that disconnects a user, from their game, if they lose their internet connection for more than three minutes. This new Xbox not only requires an Internet connection to function but also forces the user to have a Kinect 2.0 camera plugged in and setup in order to even turn on. This always on device will be able to, in theory, record audio and video 24/7. The developer cannot be named for fear of Microsoft retaliating against them and their company for breaking NDA.

The new Durango hardware will also not play games from a disk. Instead, the games will be required to install to the Hard Drive. Each title will come with an activation code that can only be used once. Players will have to register this code to their console in order to play the game. Microsoft will use this method to get rid of all used game purchases. They also will not allow users to share games with friends. 

Microsoft has ceased several of their key development platforms towards the end of the Xbox 360 platform. Unlike Sony, they are not reaching out to Developers for feedback on their new console. The new Xbox is nowhere near as easy or simple to program for as the upcoming PlayStation 4 is. 

Adam Orth, now former Game Director at Microsoft Game Studios, had some interesting comments to share via twitter earlier this month. He tweeted the following:

Orthy @adam_orth
“Sorry, I don’t get the drama around having an always on console. Every device now is always on. That’s the world we live in. #dealwithit”

When pressed about Diablo 3 and SimCity having issues staying connected, for users to play, or when the Internet goes down, Orth responded:

Orthy @adam_orth
“Electricity goes out too.”

When questioned about areas of the country that don’t have reliable broadband, Orth responded:

Orthy @adam_orth
“Why on earth would I live there?”

Notice how similar this messaging is to what Microsoft PR told me about the original Xbox Live being broadband only in a world where broadband was lacking.

Shortly after making these comments, Orth’s Twitter account went to private and Microsoft PR began to distance themselves by stating Adam Orth does not make comments on behalf of Microsoft and they have no further comment about a new console. To correct response, to put out the fire, is to state that Microsoft believes consoles should be allowed both online and offline. However, because they are about to release an always-online console, they can’t say this.

Adam Orth is no longer a part of Microsoft Game Studios. While it is unclear whether he was forced to resign or resigned on his own, he was no longer a part of the company within 24 hours of these statements. Orth is the first official face, from Microsoft, to bring to light their plans before the May 21, 2013 reveal event for the new console. So how is Microsoft planning on spinning it?

While we cannot guarantee a reveal on May 21, it appears this is the official date. The console will then be given more details at Microsoft’s E3 2013 Press Briefing, normally held on Sunday or Monday before E3. Microsoft will then hold a separate event a few weeks after E3 to give the final details of the new box. The console should ship in late 2013 or 2014 around the same time as PlayStation 4.

Microsoft will reveal pricing on their console to be subsidized at 200 to 300 dollars. This box will be sold with a contract to Xbox Live similar to how AT&T, Verizon, or Sprint sell you a new mobile phone. Microsoft will require the device to “always be on” to ensure that users are connecting to Xbox Live and not trying to get out of their contract to pay for Xbox Live. A non-subsidized console will be sold at double the cost of the subsidized one in very limited quantities. Microsoft may limit this particular console in order to push this new pricing on consumers.  They will claim this is how you get the latest technology at a fraction of the cost from prior generations.

Sadly, the new Xbox will not be backwards compatible due to using a completely different chipset than the Xbox 360. To compensate for this, the original Xbox 360 will be redesigned, and repackaged, as a $99.99 box to compete with other set top boxes like the Apple TV, Roku, and Boxee. 

The question must be asked: Do gamers want an always-online console? Sure, we need this for multiplayer or cooperative games. But if I am playing a single player title and my Internet goes down, why can’t I continue playing it? If I take my console on vacation or to grandma’s house and there is no Internet, why can’t I play my offline, single player games? 

Microsoft has no need to put what is best for the consumer as their primary goal. Their job is to maximize profits for their shareholders. What was the biggest problem for them in the Xbox 360 generation? There is a group of players that played a game of cat and mouse with Microsoft with hacked consoles. Pirated games were played via hacked firmware on the DVD drives of Xbox 360 consoles. This provided gamers with online and offline access to software without having to pay a dime for them.

Piracy of any kind does nothing but hurts the industry. And even if this problem was widespread, reacting to it by forcing all users to ridiculous DRM policies with an always-on console shows how arrogant Microsoft is. Their arrogant stance, in the upcoming generation, is that they were number one and people are invested in their achievements, friends list, and Xbox Live. They won’t leave that for the PlayStation 4. 

Arrogance is leading Microsoft to make some foolish decisions and arrogance will lead the next Xbox to be one of the biggest disasters in the industry. Unless Microsoft charts a new course, at the eleventh hour, they will destroy the Xbox brand. Stay tuned, the potential train-wreck begins on May 21, 2013.

These comments are based on rumors and speculation. While we have studied the game industry and covered it since 1997, this editorial is based upon a pre-released console and specs that have not been confirmed publicly by Microsoft. Microsoft does not comment on rumors and has not officially announced a new console.

By Kaleb Rutherford – 04/15/13

Screenshots for Arrogance Will Lead to Always Online Xbox 720