sorry for bad word writing or grammar, i´m not a native english speaker or writer.
unfortunately it´s a side effect of being able to play without the disc. ( http://www.theverge.com/2013/5/21/4352314/xbox-one-hard-drive-game-installs )
In our current generation, unless you chipped your console or something, selling of your game basically meant you couldn´t play it. If you lent your game to your buddy, you couldn´t play it either as the disc was necessary. with the ability to play without the disc it opens up a scenario, that without restrictions, could potentially be harming to developers. A little disclaimer: I´m not endorsing how microsoft it handling this. I´m only tryng to nuance the discussion by trying to look at it from a business perspective.
Let´s say we´re able to play without the disc and no fee for taking it to a different console and installing it there. This basically means that you´d be able to buy a game, share it with all of your buddies and then sell it once you´ve played it. I personally know i would fucking love to share that game among my friends and have them share their games with me and there´s no back side of the medal for us either, as one having the game disc doesn´t stop the others from playing it. On top of that you can actually get some money back by selling it afterwards to fund the next game you´d like to buy. Great for consumers, probably bad for the developers. i use probably here, as the effects of game sharing of this nature hasn´t really been researched or elaborated on as far as i can tell, so i have to go with gut feelings instead of empirical evidence (which could prove that this worry is just a percieved problem and not a real one!)
So we see that without restrictions there are some potentially bad side effects of the convenience of no disc when no restrictions are set in place.
Now let´s put the restriction of $5 for installing it on a seperate console instead of for free, and introduce that the original game price is $60. Let´s go back to the friends sharing the game between them, and let´s say that they are five friends. The original buyer buys the game for the original price and the other four can buy it for $5 each. in terms of revenue this amounts to $80 for basically one game sale and four lendings. in general this would seem like a good strategy, as the low price of $5 would interest people in playing it who necessarily wouldn´t buy it themselves. Here comes the problem though, what if there´s two people who want to play the game that they´d be willing to buy it for $60 and the rest only for $5. Since only one guy has to pay $60 and the rest can get it for $5, they´re basically giving up $40 of revenue, when they could have gotten $120 of two people.
To further the point let´s imagine that a game sells 1 000 000 copies with no sharing (everyone buys at the full price) and generates $60 000 000 in revenue. Now let´s say that 500 000 of those people buy it at full price and the rest burrow it and pay a $5 fee to install it. To have the same revenue this would mean that 6 million people would have to pay the $5 fee! For one full copy you´d need 12 people paying the fee and intead of just having 1 000 000 people buying it you´d need 6 500 000 total sales in this situation. From a business perspective this could be problematic when you consider that install bases for the consoles take some time to work up, since demand has to drastically rise to generate same revenue as earlier.
i can see this problem from a business perspective, but personally i think that the publishers and developers haven´t really outlined causalities of what drives the demand for their games correctly. Is it price, reviews, amount of post-launch content, amount of hours you can play, nostalgia, or just the general genre of the game? all these factors could vary greatly for different games and it seems that bigger publishers and developers are bloating their budgets to deliever “high-end” experiences because they aren´t doing their research well enough. So i think that a bigger problem is actually how they handle their development costs. Indie games are showing that lower budget games can really be profitable and it seems like developers aren´t considering making smaller budget games and releasing more of those to the market. Not every game needs big cinematics and big budgets, because quality of the game isn´t necessarily stronly correlated to either of those aspects. i think that if developers try to scale back, focusing on less big projects and instead try to divide their attention between both smaller and bigger projects they would be more suited for changes in the industry.
In all honesty i think the $5 fee is an excellent idea and could generate revenue where there previously was none, but an apparent lack of understanding of their demand curves and having bloated budgets as a result of it is probably the only thing stopping this. I personally won´t be supporting the next-generation consoles if i´m required to pay a fee every time i want to lend a game from a friend or buy something used because my wallet is flat after paying my living expenses. This summer i´m going to save up my pennies and buy a ton of games that i haven´t had the oppurtunity to play. all of them used and all of them on current gen consoles. until the manufacturers, publishers and developers adapt a more consumer friendly mind set, they won´t get money from me. Hell, i hardly have time to play games so the wii U fits me fine already since all the games are coming out when i finally have some time again. and I can fucking lend them to friends and buy the games used without extra expences.