Microsoft Bans Chipped Xbox Users
The BBC just ran an article on Microsoft banning an estimated 600,000 Xbox users from its online gaming service Xbox Live for running “chipped” systems: systems that have had their hardware modified in some way. While some chipped systems allow for the use of pirated software, they have a variety of purposes. It’s unclear what fraction of these systems are actually engaged in piracy.
While the “moral” aspect of the move may seem clear, the economic implications are somewhat more cloudy. What is clear is that Microsoft has kicked off a large number of paying users of its Xbox live system, indicating a substantial hit to a continuous, monthly income stream. This represents millions in financial harm to Microsoft. It also represents a substantial public relations fiasco with Xbox live users.
The benefits to Microsoft are much less clear. First and foremost, the banning of users from Xbox live does nothing to prevent users of “pirate systems” from actually pirating Xbox games. It only keeps them from playing the games online, on Xbox live. This suggests that lost income from Xbox live subscriptions will not be made up by legitimate game sales. Also, as discussed above, it is unclear as to the actual fraction of Xboxes that were put to infringing use. This means a number of Xbox live account holders may not have been pirating in the first place.
It seems strange that Microsoft would trade a guaranteed, multimillion dollar income stream for an uncertain drop in piracy and certain anger from its customers.
Let’s face it, Microsoft will never clamp down completed on this, because there will always be a tech kiddy somewhere finding new eays to hack the consoles.
Anyway, I think the amount of bans Microsoft made was just waaaay over the top – I hope people received refunds on their XBL subscription, else that’s like $50 down the drain.