I'm a little late to the party, but I want to talk about the Xbox one thing. Specifically, their plan to charge a fee for second hand games. I've started this drunken analysis without actually knowing where it's going to end up, but based on experience I reckon the ratio of price elasticity of supply to demand in the second-hand market is going to be the deciding factor. Let's find out!
Here's a graph of the second hand games market.
D represents demand, S1 and S2 being separate supply curves. Currently the market is at Q1P1, where D represents what people are willing to pay for games and S1 is what previous owners are willing to sell for plus whatever markup the middle-men like GameStop charge. When Microsoft start charging for second-hand games that charge is added to the supply price. The supply curve therefore shifts upwards from S1 to S2, which brings the equilibrium point to Q2P2. Less games are traded, but at a higher price. The area shaded in dark orange represents the deadweight loss from this change - the amount of happiness which has disappeared from the system. This is bad.
However, it's not up to Microsoft to account for total happiness. Microsoft is a profit-maximising firm, and their objective is to generate revenue. As things are at the moment, Microsoft makes no money whatsoever from the second-hand games market. Once they charge the additional fee Microsoft collects revenues equal to the area of the light orange section - the difference between S1 and S2 multiplied by the quantity traded in the market.
Thus, so far Microsoft is behaving sensibly. But, what happens when we factor this in to the market for Microsoft's games in the new-games market?
The existence of the second hand market is a form of price discrimination, albeit an incredibly crude and inefficient one. There are effectively two sets of consumers - those who will sell the game second-hand later, and those who will keep the game until the disk disintegrates. The latter group is irrelevant to this analysis - they don't give a shit about the second-hand market and have no influence over it. It's the first group that matters, and for them the second-hand market has the same effect as a discount on games. If a customer values a game in and of itself at $30
and knows that he can sell the game later for $20 then he will be willing to pay up to $50 for that game. If he can only sell the game for $10 then he will only be willing to pay $40 for the game in the first place. Looking back at our first graph, and remembering that the light orange area is taken by Microsoft, the resale value of a game from the point of view of a new-game-buyer has dropped from P1 to P0.
Let's graph the new-game market, ignoring those who don't resell their games later.
I'm taking a perfectly elastic supply curve because I think game prices are pretty much set in stone. "This is the price at which they will be sold, and at this price we will sell however many we sell". When the second hand market is taxed (essentially), the demand curve in the new-games market shifts downwards because people get less money for reselling their games and therefore they might as well be paying more for their new games in the first place. The difference between D1 and D2 is the difference between P1 (the free market price of used games) and P0 (the money from second-hand sales which goes to the previous owner after Microsoft takes its toll). With lower demand there are lower initial sales, shifting demand from Q1 to Q2. Microsoft loses revenue equal to the purple area. (As a point of interest, there is a welfare loss equal to the area of the white triangle directly above the purple bit.)
Microsoft is a big company with many smart people, several of whom will have done more economics than me. Therefore they must be aware of this, and therefore they will be banking on the light orange area in the first graph being bigger than the purple area in the second graph.
The second graph only includes people who will later sell their game so the size of Q must be the same on both graphs. Hence they are directly comparable. However, the height of P makes a big difference to which area is bigger, as does the difference between P1 and P0 (ie, how much Microsoft charge for second hand games divided by 2). There will be an optimal level of charge depending on the price of new games, the price of second-hand games, and the size of the market. None of these are figures which I am sober enough to find, but all of these are figures which Microsoft has access to. The slope of the lines (price elasticity) matters too, as I predicted, and no matter how sober I was I couldn't get those. I'd need a marketing company. Something like, I don't know, what Microsoft has maybe.
What I'm trying to say is, this is pretty basic stuff and Microsoft won't get it wrong. Yes, many people will be put off buying Microsoft games altogether, and I imagine these people will be very vocal about it,
but Microsoft will more than make up for it in second-hand games revenue. They won't charge too much for second-hand games because that would hurt them overall. Customers and game shops will lose out and I guess you can be angry about how a company is hurting you for profits, but it's a company - making profit is what it's meant to do. EDIT: Having just read some stuff from Jeff's link it looks like they intend to charge full price for the game on each occasion of its use. If what I'm reading is right, it's full-on retarded. You essentially eliminate the second-hand market, turning the entire area of the second graph purple and getting rid of the light orange area. I won't believe Microsoft is capable of such an act until I see them do it.
tl;dr: Microsoft can profit from charging for second-hand games. Edit: But they might not if they're genuinely the kind of people who can't be trusted not to injure themselves with pencils.
All the other issues with Xbox One might be huge and deal-breaking, but they don't interest me.
Congrats! (<--- comment)