How Microsoft Xbox Live Could Become A Force In The Digital Rental Marketplace

Soulja Boy playing Xbox Live


By Ronnie HobbsThere you are, staring in disbelief at your massive collection of Xbox Live Arcade games that has slowly accumulated over the years – a collection that until recently you forgot even existed. And therein lies the problem with digital copies of video games. Once you’ve completed them, or their appeal has long since passed, there’s virtually very little you can do with them. When all we really want to do is loan them to a friend, or even exchange them at the local GameStop for even the most minuscule amount, the fact is we simply can’t. But why? And will there ever be a way to bypass this seemingly gigantic obstacle that plagues owning digital content?

How about renting your old games to friends? Yes, I’m talking about actual P2P game rentals over Xbox Live, from one consumer to the next. With emerging companies such as OnLive and Gaikai making strides recently, it’s clear that cloud-based technologies are improving every day. Eventually it will only make sense to use this technology in a P2P relationship, and not just for services such as cloud-based game saves like Sony is now offering to PSN+ users. Thankfully, this type of service could be coming to a console sooner than you might think.

As a consultant to the video game industry, it’s often our job to share upcoming technologies and offer advice on how to move the industry forward. Lately, we’ve had several serious conversations about the possibility of an online game rental service, both with video game executives and technology leaders. With Blockbuster slowly dying, and game-specific rental services like GameFly not nearly delivering on the same level as Netflix does for movies, there are very few options for consumers when it comes to renting games. It’s no secret the idea is floating around, but there are a few obstacles to overcome in order to make this happen via Xbox Live, or even through PSN for that matter. In this example, I’ll explain how Microsoft could take advantage. Here’s how the basic premise would work.

Imagine purchasing a title like Limbo, for example. You’ve played the award-wining indie game several times through, earned every achievement, and you’ve since moved on to other games. So, instead of having it lay dormant on your hard drive for years to come, why not allow other Xbox Live users to rent it for one day at a price of 200 Microsoft points? And by doing so the 200 Microsoft points would actually get divvied up between Microsoft and the game’s owner, at a 70-30% split. This leaves 60 points to go back to the user who owns Limbo, and 140 back to Microsoft for providing the service. This same theory could be applied to the Games on Demand service. Instead of downloading the game’s demo, why not rent the game, earn some achievements, test out multiplayer for a day and really decide if you want to purchase the full game?

This type of income split would incentivise consumers to rent and try more games with less financial risk, and Microsoft would earn enough money back from the extra purchasing of Microsoft points to make it profitable, for themselves and for the video game publishers. Of course, one could argue that this would limit the purchase of new games, but the 1-day rental period would keep people from completing most games, and could in fact push them towards an additional rental or even full purchase. To be extra cautious, Microsoft could even restrict the number of times each user could rent out their particular title, which would help keep the number of available rentals on the marketplace to a reasonable number.

This is just one example of how Xbox Live could embrace the video game rental market, and create a platform that goes well beyond the standard service that has failed so many previous companies. The digital library and massive user base is already in place, along with a working monetary system in the form of Microsoft points. In my opinion, the video game rental market is an untapped pipeline of revenue, and could generate massive income for the first company who takes it digital. And better yet, it’s actually a service that gamers would appreciate.

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