Let's fake a deal | This Week in Business

This Week in Business is our weekly recap column, a collection of stats and quotes from recent stories presented with a dash of opinion (sometimes more than a dash) and intended to shed light on various trends. Check every Friday for a new entry.

Earlier this week, we looked at Microsoft's decision to block unlicensed third-party peripherals from working on Xbox One and Xbox Series X|S, and asked what kind of impact that would have on unlicensed accessibility devices (potentially devastating) and the impact it would have on Microsoft's fig leaf excuse for the move, cheaters (next to none).

Today we're going to ask a different question about Microsoft removing functionality of its game systems a decade after launch and once users have come to rely on it: are they even allowed to do that?

The short answer is yes.

Hold on…

I'm being told 100 words is a little short for a column, so I guess it's time for the longer answer.

Right to impair

Let's look at the Xbox Software License Agreement, the legalese you agree to simply by using your Xbox console, Kinect sensor, or any authorized Xbox accessory.

Why are we looking at a software license agreement when the issue is Microsoft removing functionality from the hardware? Because you might technically own the hardware because you bought it from the store, but the same cannot be said of the software that makes it anything more than a sad conversation piece for any room in your house without a TV.

QUOTE | "The Xbox Software is licensed to You, not sold. You are licensed to use the Xbox Software only as pre-installed in Your Xbox Console or Authorised Accessory, and updated by Microsoft from time to time. You may not copy or reverse engineer the Xbox Software."

The capitalization of "You" suggests Microsoft views Xbox customers as being of divine origin, but the rest of the words make it clear that's not the case. In short, Xbox customers are paying $500 for "ownership" of something they can only use if they stay in Microsoft's good graces and continue to use the hardware they own in exactly the way Microsoft would like them to.

These devices are only ours to do with as they wish

I single out Microsoft here only because that's the company that made this a timely topic of discussion for the column. The licensing agreements of Nintendo and Sony have similar language specifying that you don't own squat when it comes to the software that makes their systems function.

These devices are only ours to do with as they wish.

And just like Microsoft recently went out of its way to make its customers' products less functional, Nintendo and Sony have done the exact same thing in the past.

In April of 2010, Sony pushed a PS3 firmware update that removed the "Install Other OS" functionality for security concerns a couple months after it was used to hack the system. That certainly made it harder for academics and medical researchers to install Linux on the PS3 and use it for new projects, and because Sony began shipping new PS3s with the later firmware installed, it was harder for anyone already using PS3s for such projects to replace units that broke.

But one thing the removal of Other OS functionality did not do was meaningfully preserve the PS3's security, as we witnessed PS3 security vulnerabilities proliferate like Street Fighter 2 iterations. The Champion Edition PS3 Hack built on the original to enable piracy a few months after Sony scuttled Other OS. PS3 Hack Turbo: Hyper Fighting arrived a few weeks after that. Just before the first anniversary of the vanilla PS3 hack, we got Super PS3 Hack: The New Challengers. And finally in 2012, there was Super PS3 Hack Turbo.

"Agree, or lose access to your device and stored data. That's what happens when owners become renters"The Electronic Frontier Foundation in 2014

And we would be remiss to leave Nintendo out, considering in 2014 the company pushed through a new end-user license agreement for the Wii U that dictated new terms for users and prevented the system from functioning in any way until the user submitted to them. The agreement Nintendo was forcing people to comply with if they wanted to ever use the Wii U again included the ability to change the user's system and its functionality at any time, without notice.

QUOTE | "This trend bodes ill for consumers. As long as your devices came burdened with DRM and onerous licenses, a device you own may stop working merely because the manufacturer wants to rewrite its contract with you. Agree, or lose access to your device and stored data. That's what happens when owners become renters." – The Electronic Frontier Foundation criticized Nintendo's take-it-or-leave-it "agreement" in a statement referencing Sony's removal of the Other OS functionality as exactly the sort of arbitrary downgrade platform holders have been known to commit.

Sony might have been taking notes at how little backlash Nintendo's update ultimatum received, judging by its PS4 and PS5 end-user license agreements since at least 2016.

QUOTE | "You must install or have installed the most current version of System Software as soon as you reasonably can. Some updates, upgrades or services may change your current settings, cause a loss of data or content or cause functionality or feature loss." – Sony's PS5 software license agreement explicitly lays out the potential for its updates to be downgrades, and says you have to go through with them anyway.

It's possible that clause pre-dates Nintendo's Wii U trickery, but I was unable to find anything before Version 1.1 of the PS4 system software agreement on the Wayback Machine and companies have a habit of memory-holing evidence that customers were ever treated better. (Remember when Unity had a Github repository of its historical Terms of Service "to give developers full transparency" but pulled it down before changing the language so devs wouldn't be able to avoid its terrible new Runtime Fee? Good times.)

Now let's suppose I don't want to update my PS5 because I hear that Sony has done something silly like pushed an update to break my favorite controller. What's the worst that could happen?

QUOTE | "If SIE Inc determines that you have violated this Agreement's terms, SIE Inc may itself or may procure the taking of any action to protect its interests such as disabling access to or use of some or all System Software, disabling use of this PS5 system online or offline, termination of your access to PlayStation Network, denial of any warranty, repair or other services provided for your PS5 system, implementation of automatic or mandatory updates or devices intended to discontinue unauthorized use, or reliance on any other remedial efforts as reasonably necessary to prevent the use of modified or unpermitted use of System Software."

I don't think Sony is eager to nuke your PlayStation Network account and history of purchases, or brick your PS5 so it won't even work offline. But Sony wants to make sure it always has the option to do that, and if it ever takes that option, its lawyers get to feign surprise at your outrage because you agreed to it. That is after all what they did in the Other OS case.

Same Shift, different industry

Of course this is not a game-specific phenomenon. There's so much legalese surrounding every aspect of our day-to-day lives – from contracts to terms of service to end-user license agreements to privacy policies to unreasonably lengthy drug store receipts – that at a certain point, you just have to trust that the people behind the products and services you use won't actively pursue the worst possible course of action that this legalese seemingly allows them to, and that they will not hold you to the irrational obligations you unknowingly agree to whenever you have the slightest interaction with one of these cursed horcruxes housing a fragment of a corporate lawyer's soul, even if from the outside it just looks like a Nissan Sentra.

QUOTE | "You promise to educate and inform all users and occupants of your Vehicle about the Services and System features and limitations, the terms of the Agreement, including terms concerning data collection and use and privacy, and the Nissan Privacy Policy." – Nissan's terms of service, as detailed in a harrowing Mozilla Foundation report released in September about the universally horrifying privacy policies of major automobile manufacturers.

So if you own a Nissan, you not only have to read through their mountains of legal emesis, you have to promise to inflict it on every single person that so much as sits in your car. Somewhere there is a very frustrated Uber driver with an overwhelming sense of duty wondering why their passengers keep giving one-star reviews.

But it's just funny, right? Some of that silly CYA paperwork that's weird but harmless. What kind of horrifying privacy complications could arise from a product that you take with you everywhere you go, is outfitted with a plethora of microphones and cameras, and connects to your phone and its treasure trove of similar information?

QUOTE | "Sensitive personal information, including driver's license number, national or state identification number, citizenship status, immigration status, race, national origin, religious or philosophical beliefs, sexual orientation, sexual activity, precise geolocation, health diagnosis data, and genetic information." – Nissan USA's Privacy Notice details the type of data it can collect and share with other companies for direct marketing purposes.

Now we know celebrated actress Brie Larson has been in a Nissan vehicle thanks to all her commercials for the company, and I'm 100% positive the company employees fulfilled their promise to inform her of the Nissan Privacy Policy and how they can sell whatever information they might have about her sexual activity, medical conditions, and religious beliefs. And there's no doubt in my mind she gave them informed consent for that because that's the kind of transparency and fair dealing these companies rely on in order to pretend any of these agreements are worth the paper they are no longer printed on (on account of how often they can be updated and changed to suit a company's needs).

Fun fact: Nissan was only the second-worst car company in the report. Who could possibly have been worse? That's right, Tesla. Of course it was Tesla.

What to do?

Don't get me wrong, there are legitimate reasons for gaming platform holders to want control of these systems after the point of sale. The console business model generally relies on platform holders getting a cut of the business done in their walled gardens, they are incentivized to protect players from having their online experiences hurt by cheaters, and of course, they want to stay a step ahead of those who would rather pirate games than pay for them.

The same online tethers that allow companies to pursue legitimate interests also allow them to easily overstep any reasonable boundaries

But as we see from the Nissan example, the same online tethers that allow companies to pursue legitimate interests also allow them to easily overstep any reasonable boundaries if they think it will make them a buck. And because we're all desensitized to the web of user agreements we've agreed to without actually reading – user agreements which can be amended without notice at any time – we often just give up and go along with it, hoping that each giant faceless corporation that makes the stuff in our lives will benevolently allow us to enjoy the products we have bought from them.

So what do we do? We can't negotiate these terms with these companies. We probably don't have access to legal teams to fight them in court, and even on the off chance we did, we're probably not going to get what we want out of it.

Sony was taken to court over the Other OS removal and dragged the legal fight out for six years before reaching a settlement. The settlement didn't exactly make anyone whole, either. Users didn't get their Other OS option back, Sony got to keep its over-reaching user agreement terms (and has only made them worse for the PS4 and PS5), and people who had been relying on the Other OS functionality got a grand total of $55 each, if they could prove they had installed an alternative operating system on a PS3. If they couldn't, they got $9.

We could vote with our wallets, but I have no illusions about the number of people for whom these shenanigans are a dealbreaker. People tend not to care about the possibility of bad things happening until they're the ones the bad things happen to (e.g., supporters of the Leopards Eating People's Faces Party.) So if we can't negotiate, legal action is ineffective, and boycotts are unrealistic, what options are left?

I would suggest a drastic lowering of our tolerance for this. We might not be able to change these "agreements" to acknowledge consumers' rights, but making a stink when someone steps over the line? Getting vocal when a company makes up new rules on the spot and expects everyone to follow them? Dragging their name through the mud when they remove functionality in the name of preventing cheating even though they're hurting their quadriplegic customers more than the cheaters? We can all do that.

It's not a perfect solution, of course. It's an attempt to leverage anger in an industry already plagued by toxic behavior, which isn't ideal. It's also not going to work every time, or even most of the time. But it may be the most effective alternative they have left us.

The thing that limits these companies isn't the language of these agreements but the pain of enforcing them

Because the terms of service aren't actually dictating what these companies can and cannot do. After all, they wrote those words in order to enable whatever needs they anticipated having. And if they decide they have other needs, they just push through a new agreement you have no real choice but to accept.

The thing that limits these companies isn't the language of these agreements but the pain of enforcing them. The only consideration keeping their actions in check is their idea of what can done without too much backlash.

When it comes to these agreements, the only real act of consent we can give is to be quiet when companies take advantage of them.

The rest of the week in review

QUOTE | "Ultimately, we shouldn't expect the marketplace to solve this one. Like any media business, the game industry has its own commercial interests, and we can't expect them to make history their top priority and preserve every single video game. " – In an excellent feature from Keumars Afifi-Sabet, Video Game History Foundation library director Phil Salvador calls on the industry to acknowledge profitable preservation of the medium cannot be the only preservation it tolerates.

STAT | 13% - The percentage of games released between 1960 and 2009 that are commercially available today, according to a recent VGFH report.

STAT | 9 – The number of EA catalog titles who are seeing servers shut down this year. Battlefield 1, Battlefield 5, and Star Wars: Battlefront 2 on PC this week joined Crysis 3, Dante's Inferno, Dead Space 2, Battlefield 1943, and Battlefield Bad Company 1 and 2 on the list of games losing support. Those last three games were pulled from stores entirely in March in anticipation of the servers going down next month.

STAT | 10 – The number of games Ubisoft announced this week would see their online services "decommissioned" in January, including four Assassin's Creed games and three Tom Clancy titles.

QUOTE | "2023 is looking better, with an expected return to growth for the business overall. However, while the big games are doing well, it's an inconsistent market for everybody else, investment has slowed, and outgoings are high. After years of excessive expansion and investment, some companies have had to look closely at their own projects, the current market trends and their costs, which has resulted in many of the job losses reported over the last year." – Our own Chris Dring looks at this year's bumper crop of big games and rising revenues as well as a ceaseless drumbeat of layoffs, and tries to answer the question of what the hell is going on with video games.

STAT | 25 – The number of 2023 game releases through October with a Metacritic average of 90 or more, the highest amount in more than 20 years.

STAT | 3.2% - The year-over-year growth in PC and console game sales across Europe year-to-date, according to GSD market data.

STAT | Around 100 people – The reported number of Bungie employees who were laid off this week.

STAT | 45% - Destiny 2's 2023 revenues are reportedly running 45% behind projections.

QUOTE | "As part of the Embracer Group's comprehensive restructuring program, Cryptic Studios will now operate under DECA Games. In addition to this organizational change, our commitment to Embracer's directive to reduce costs requires us to undertake difficult personnel changes, including separating from some team members." - An Embracer Group representative confirms layoffs at Cryptic Studios, the latest victim of the company's years-long acquisition spree that now has to cut staff because the company hit a rough patch.

QUOTE | "I think we have to come to terms with the fact that this is now a mature industry. The larger any industry grows in absolute terms, the slower it is likely to continue growing in relative terms." Midia Research analyst Karol Severin talks to us about the company's latest report, which warns that the industry's growth pace has peaked even as it forecasts low-to-mid-single digit percentage growth through 2030.

STAT | Essentially flat year-over-year – EA's Q2 revenue and Remedy's Q3 revenue. On the bright side for both companies, EA Sports FC 24 is "on track" to improve on last year's FIFA 23 numbers despite losing the well-known brand, while the just-released Alan Wake 2 is drawing glowing reviews and providing some optimism for Remedy's fourth quarter.

STAT | $20 million – The potential cost of Atari's acquisition of retro game specialist Digital Eclipse, which produced last year's excellent Atari 50: The Anniversary Celebration.

STAT | $40 million – The potential cost of Devolver's acquisition of System Era, which made the 2016 hit Astroneer.

STAT | 2.5 years – How long Anika Grant served as Ubisoft chief people officer before announcing her departure this week. The HR executive who had previously served at Uber while the company was investigated for gender discrimination by the US Employment Opportunity Commission joined Ubisoft in 2021 after the company was rocked by a wave of scandals detailing sexist and abusive behavior by leaders throughout the company.

QUOTE | "Anika has been instrumental in leading the transformation of Ubisoft's human resources and talent management function since she joined the company." – Ubisoft hangs the "Mission Accomplished" banner on its efforts to fix the horribly toxic work environment that was allowed to thrive at the company under… [checks investor relations page] …its current CEO.

STAT | "A lot of this comes down to people's ability to empathize." - Safe In Our World partnerships and training manager Sky Tunley-Stainton discusses a key to fostering mental health for people from overlooked communities in the games industry.

STAT | 3 – The number of screens on a proposed Nintendo handheld device spotted in a recent patent filing.

I'm starting to get a little worried that Nintendo's gonna Nintendo this up instead of making a straight-forward more powerful Switch 2.