>>>> from
www.ozymandias.com The Problem with Modchips
Email from “HcC” earlier last week with an interesting topic: console modding. To quote:
“I also wanted to ask your thoughts on piracy and the xbox modding community. How you think it impacts the way games are made, if you think it does, or anything of the sort. It's just a topic I wouldn't expect to see on your blog and would love to know your opinion. Do you think it will change the success of the xbox 360 in a positive or negative way if it is modded beyond the current firmware runaround.”
It’s a great question, and I’m happy to share some of my thoughts and opinions on the topic.
For the uninitiated, a mod chip is simply a device that circumvents some of the protections placed on a video game console. A “modded” console is then one that can run unauthorized content or games and potentially enable new functionality. Modchips (and “softmods” or software exploits) have been around since the beginning of consoles, and have a small but vocal minority who tend to argue vociferously about why they have a “right” to use them. These modchip defenders tend to use one of three arguments to justify their use:
- the ability to copy and play pirated games
- the ability to play import games
- the ability to add new functionality (such as running homebrew software)
Let’s take these on one at a time.
First, the ability to pirate games. I mean, really – what can you say here? We already had a
conversation about piracy earlier, and at the end of the day every game not legally purchased is simply stealing money from the creators. Some people attempt to justify piracy by pointing to the perceived high price of their hobby and/or games, but the argument just doesn’t hold up. You don’t steal a Ferrari that you’d love to drive simply because you can’t afford it, right? Same thing.
The desire to play import games is at least a reason I can rationally understand, but cannot condone. Sure, there are games you might want to play that are either released earlier or, quite possibly, not released at all in your region. But sometimes companies have good reasons to either not release a title into a region or release it at different dates. It may be because of the time and cost of localization, marketing plans, ad buys, cultural considerations, or perhaps even because of the impact of piracy in the region. Whatever the case, it’s safe to assume the publisher has thought about it. The good news is that most publishers are developing with multiple platforms, regions, and languages in mind up front, so this is becoming less and less of an argument. (After all, it’s in the publisher’s best interest to sell as many copies as possible, right?)
Finally, let’s talk about the desire to add new functionality to the console. Some folks want to enable new functionality on consoles beyond what was delivered by the manufacturer. Sometimes the desire is to add new hardware capability (say a larger hard drive); other times it’s to add new functionality such as PVR support, web browsing, or to run homebrew applications of whatever sort might be imagined.
This is the one aspect of modding I’ve always struggled with the most myself, but at the end of the day I just can’t condone it. Here’s why.
The console business is a razor/razor blade model. Hardware (the console) is subsidized (meaning Microsoft sells it at below cost) to make it easier for consumers to get it into their homes. The business then makes this up by selling you additional hardware (peripherals), software (games), and services (Xbox Live). The success of this razor/razor blade model is tracked by analysts as the “attach rate,” or how many of these add-ons an average person might have per console. (The most common metric you’ll see tracked is the game attach rate to a console, but some analysts also track the attach rate of peripherals and Xbox Live.)
Over time you buy games (and other peripherals and services). The revenue generated from those purchases helps to make the business a profitable one (which is the reason you see a healthy game industry, and continual investment in new features, games, and hardware). Some folks point to the fact that they bought the hardware and believe they should be able to do anything they wish with it. Unfortunately, this argument ignores the fact that they’re buying that hardware at below cost, and it’s the razor/razor blade model that makes it even possible to buy at that price. The other solution would be to sell the hardware at a price that covers cost and also includes a profit margin so that selling the console alone (with no game/peripheral/service sales) could be a stand-alone business. Problem is A) this model already exists (it’s called a PC), and B) selling a console at PC prices (especially with the capabilities the console has in it) would simply be too expensive and no one would buy it. At the end of the day, the cost difference needs to be made up somewhere, and that’s why we need to you buy those razor blades.
The interesting thing to me is that I think the
idea of homebrew/user-created content is looked at with much interest at Microsoft (we are a software company after all), but the challenges caused by the impact to our business model make it very difficult to enable. Interesting tidbit: a friend of mine at Microsoft once demonstrated a modded PSP to Bill Gates and showed off all of the interesting things that enabled. According to my friend Bill was intrigued and asked the audience what we might be able to do to encourage this sort of thing without damaging the business. I love that our top executives think this way – the challenge, of course, is that modchips allow much more than just homebrew software, and so it’s a tough problem to sort out.
To sum up, I think the reason we see a lot of industry angst around modchips is the piracy it enables, and the damage it causes to attach rate (which in turn breaks the fundamental model all consoles are built on). A lower attach rate is bad for the industry as a whole as it impacts game, hardware, and service sales for the entire industry (not just Microsoft). While I imagine there may be a few folks who really do just want to run custom applications on their console and have no intent to pirate games, we have yet to find a way to separate legitimate use from illegitimate. It’s disappointing, but there you go.
I do hope my opinions on the subject help you understand how many in this industry view the subject. At the end of the day piracy is a tough problem that affects us all. I do hope that it one day it won’t be as much of an issue, but I fear that time is still far away.
Interesting article on modded consoles(360 related) 
