I agree with pretty much everything in the video. I think the one major counter argument that people bring up that he didn't address is the fact that Steam, as a storefront on an open system, has competition from other storefronts like GOG, whereas PSN and XBL, as storefronts on closed systems, do not. People have brought up this counter argument fairly frequently, and while they do have a point it doesn't go as far as they think.
So the counter argument would go that since Steam has competition from GOG, Amazon, and other online storefronts, Steam will have to exert pressure on publishers to make sure they have lower prices on Steam than GOG or Amazon, leading to cheaper prices for the consumer. Microsoft and Sony, without such competition, don't have that pressure to lower prices. Thus, the argument goes, XBL and PSN won't see the same kind of price competitiveness as we see on Steam, so we need the used game market to make sure consumers still have access to cheaper games.
This argument is flawed for two reasons. First, because even without competition from other online marketplaces, competition would still exist for XBL and PSN. Second, because even if XBL and PSN were completely closed off to pressure from competition, pressure still exists within each of those closed systems to keep game prices down.
So first let's talk about competition between storefronts. XBL may not have competition from GOG, but it will still have to compete against physical sales, whether from Amazon or from Best Buy and Gamestop. Importantly, as it currently stands Gamestop's dominance in the physical marketplace lets Gamestop prevent competition from XBL. Because Gamestop is the strongest player in the used marketplace, removing the used marketplace will hurt Gamestop the most, and allow greater competition between physical and digital as publishers and platform holders won't have to listen to Gamestop's demands. So, the combination of Gamestop being knocked down a peg and digital sales increasing in legitimacy could actually increase competition. But even beyond that, even if Gamestop and Amazon stopped selling games entirely and the only place you could buy an Xbone game was on XBL, XBL would still have competition. From PSN. We've already heard how in the next generation we're going to see fewer exclusives and more multiplatforms. XBL would still have the same kind of pressure Steam has to beat GOG, because XBL would have to beat PSN.
But even beyond that, even if we ignore PSN and look at XBL alone, there will still be competitive pricing. It may not be Microsoft exerting pressure on publishers to lower prices so XBL can stay competitive, it will be publishers and developers competing with each other so they can compete within XBL. We can already see this on 100% closed systems like the iTunes store. Apple has absolutely no competition in selling iPhone games. The iTunes store is the only place you can buy a game for your iPhone. And the iTunes store doesn't even really compete with the Google Play store in the same way XBL would compete with PSN, because the price of smartphone games are much smaller than the price of a phone, meaning no one is going to buy a Samsung phone over an Apple because they can get Angry Birds for $1 cheaper. So really the only competition for iTunes is entirely internal. And yet iTunes regularly sees deep discounts off of the already low price points, because developers and publishers are competing with each other. So even beyond the competition XBL would face with PSN and physical sales, there will still be competition within XBL to keep game prices down.
Of course, due to the backlash we're not going to be able to move to a completely used game free marketplace, so the above arguments won't apply as is. That probably will have to wait a bit longer. That's unfortunate.
