By IAN SHERRBloomberg News
Microsoft showed off its Xbox One console in June at the E3 Electronic Entertainment Expo in Los Angeles.
Microsoft Corp. said Wednesday it will reverse some unpopular policies it recently announced for its coming Xbox One videogame console.
Following loud consumer complaints, Microsoft backtracked on some unpopular new policies for its Xbox One. George Stahl reports on MoneyBeat. Photo: Getty Images.
The Redmond, Wash., software company said it would no longer require its Xbox to connect to the Internet each day, nor would it restrict how its videogame discs are traded, resold or rented.
"We have listened and we have heard loud and clear from your feedback that you want the best of both worlds," Don Mattrick, head of Microsoft's entertainment division that houses the Xbox, said in a statement.
The changes are a clear misstep for Microsoft, whose currently selling Xbox 360 has reigned as the top videogame console in the U.S. for more than two years, according to NPD Group.
Microsoft unveiled its $499 Xbox One in May to much acclaim for its new features and high fidelity images.
But shortly after, the company fell under heavy criticism among gamers for its newly restrictive stance on used games and game play.
The policies for the Xbox One due out in November included offering technology to videogame publishers to restrict how titles are resold or traded at participating retailers.
The result was a large campaign by customers, partly through Twitter, to convince Microsoft to reverse course.
Compounding that pressure, rival Sony Corp. said its coming PlayStation 4 would not include such restrictions, and instead allow customers to freely trade, share and resell game discs as they pleased. Sony also said its device would not require an Internet connection.
"When gamers buy a PS4 disc, they have the right to use that copy of the game, they can trade in that copy of the game at retail, sell it to another person, lend it to a friend, or keep it forever," said Sony executive Jack Tretton to rounds of applause during the company's presentation at the Electronic Entertainment Expo last week. "It won't stop working if you haven't authenticated within 24 hours."
That and the price tag, which Sony said would be $100 cheaper than the Xbox One, swayed many gamers away from Microsoft's upcoming product. The following day after Sony's announcement, preorders for the PlayStation 4 were so high that the device was listed as the top-selling videogame product on Amazon.com Inc.'s website, above the Xbox One.
In response, Sony executives also said they were raising internal estimates for the PlayStation 4's initial sales.
Microsoft's efforts to placate unhappy gamers though will also change some of the new technologies the company planned to offer with the device.
The company said a videogame's disc will need to be inserted into the Xbox in order to play, and sharing titles wirelessly among households will be abandoned. Games purchased over the Internet won't be able to be shared or resold, Microsoft said. "It will work just as it does today on Xbox 360," Mr. Mattrick said.
The videogame maker also said its Xbox One will lose one restriction the Xbox 360 currently has, eliminating various rules requiring discs purchased in specific regions of the world to only work on corresponding devices programmed for those areas.
Some investors were clearly happy with the news, pushing shares of GameStop Corp., which derives roughly half of its profits from the trading and sales of used games, up 6% in after-hours trading to $40.84.
Microsoft shares remained flat after closing down 1.1% at $34.59.
Pete Dodd a 36-year-old adult caregiver in New Haven, Conn., who had rallied gamers to send messages to industry executives using Twitter, said he was pleased with the changes.
"It's a victory for us," Mr. Dodd said. But Microsoft still has a ways to go before its relationship with enthusiasts, also known a hard-core gamers, is repaired.
"Even the flip flopping on this, even though it's a good sign, it does paint a picture of a corporation that doesn't know what it's doing," he said.
Mr. Dodd said he'll be sticking with his pre-order for the PlayStation 4, which is due later this year. Now that Microsoft's policy has changed, however, he'll consider buying Xbox One later on as well.
Write to Ian Sherr at ian.sherr@dowjones.com
A version of this article appeared June 20, 2013, on page B2 in the U.S. edition of The Wall Street Journal, with the headline: Microsoft Backtracks on Xbox Policies.
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