1. Collusion.

The unfortunate truth of the retail games industry is that it relies on a lot of wheel-greasing, which is why it tends to favour higher-end publishers and developers with deep pockets. It's no great secret that review scores can often be bought indirectly through the means of exclusive interviews, junket goodies and even potential job opportunities for reviewers to become game developers. It's also no great secret that reviewers tend, as a group, to have certain in-built prejudices against certain types of game, and they tend to think and award scores like a community.

This behavior is arguably necessary in a retail environment where the buying power of the retail chain is largely concerned with what bulk orders for volume they can place. With only limited shelf space up for grabs, a publisher looking to maximise its shareholder returns has to take the view that they need their product in prime position.

Indeed it would be irresponsible of them as a company not to do that, and so the only questions become whether what they're doing is legal, and whether they have genuine ethical concerns about some of the tactics that might be deployed. In most cases the answer to that second question is "maybe, but not enough to make them stop doing it". Publishers are not evil, but they operate in a difficult environment.

So this behavior model will clearly also translate across into Xbox Live Arcade. XBLA is already a constrained retail model (see point 3 below) and the threat of de-listing only intensifies that pressure. So what will happen is that sales-oriented developers will behave like retail publishers and start taking steps to get those high review scores. They will also continue to establish their personal relationships with members of the Xbox team so that they can have a champion inside the platform itself, because it's easier to de-list a game from someone anonymous rather than from your friend at developer X who'll phone you hurt and angry.

Lastly, and far more seriously, it means that the developers will increasingly pitch for products that they think Microsoft will like, or products that Microsoft themselves might think should be on the service, and so XBLA will become a much more for-hire service. While this is a valid model for a smaller digital service like interactive TV (and is basically what I do for a living), I'm not convinced that it's a model that should be applied to a console gaming audience.

2. Consumer Choice

Clearly this move affects consumer choice. Less games available for sale means less games available for browsing, which means more of a hit-driven mentality in an online space. This will mean less sales. I don't want to bore my readers too much with talk of the now-cliché Long Tail effect, but the fact remains that Amazon, Itunes and Netflix all consistently report that they see more sales as whole from their long tail aggregate than they do from their hits.

The problem here is not that channelling consumer choice is a bad thing, it's that channelling choice should only be engaged in where it is necessary. In retail it is necessary because of the physical costs of distributing product and maintaining stores with high rent. In television it was necessary because the physical constraints of the technology meant that all interests simply could not be served (though this is now slowly changing).

In the online space it is not necessary. The cost of distribution is negligible and there are no technical constraints of broadcast technology. Ultimately an XBLA game as a product is just another small portion of data on a disk space on a RAID rack somewhere in Redmond that gets called up and downloaded as required. Delisting such product saves practically nothing and gains the consumer nothing. (And it doesn't answer the question of what happens to the consumer who bought a game which was subsequently delisted, only to have their Xbox hard drive fail at a later date: How do they get their game back?)

Which leads me nicely into:

3. The Main Problems

The real problems that Microsoft have (which de-listing is not going to solve) are all to do with key choices that they have made in the construction of XBLA for Xbox 360, and how those decisions are driven by portal-based thinking rather than aggregator-based thinking.

Portal-based thinking is basically the headset that tries to take the retail and magazine-based view into the internet. Portals try and push selected content out to their readers in a managed fashion. It inherently is driven by the assumption that consumers need to be sold to, and consumer-experience needs to be guided with studies of "journeys" and so forth. Portals worry a lot about managing the user expectations. Yahoo is a good example of portal-based thinking.

Aggregator-based thinking is the reverse. It's the headset that tries to provide the best tools for the readers to find what they want. In the aggregator model, the consumer and his friends are the sales people and the "journey" is unimportant. What's important is that there is enough content to be found, and that it can be accessed easily. Digg is an example of aggregator-based thinking.

Microsoft clearly have always thought of Xbox Live as a portal. This has led them to a number of decisions:

1. They have always throttled releases. This is a leaf taken out of Nintendo's old playbook with the NES, wherein you manage the release pattern of games so that every one gets the chance to shine. This results in a lot of developers clamouring to get in the door, and a lot of collusion-driven behaviour as a result. It also results in Microsoft starting to try and direct traffic in order to raise quality, which results in a highly managed catalog full box-checking (as in they fulfil perceived genre or other criteria) bad games. In short, the throttled release decision is largely responsible for the poor quality of XBLA content.

2. They have focused the whole experience on the Xbox itself. You buy Live games from the Xbox 360, you find them through it and use it as your gateway into the wider world. This was an understandable but incredibly stupid decision made a time when they were trying to sell the new console.

At that time it probably seemed to them that they really had to get people to look at their dashboard to get into the brand, but the problem is that using a console joypad as a primary means of finding and sorting large quantities of content simply sucks as an experience. It leads to short, stubby menus, long tedious scrolling lists and a general touchy-feely air to the design (remember, portals think "journeys" are paramount). It is simply not suited, nor will it ever be, to presenting large volumes of content.

Imagine if Apple had created the iPod platform without iTunes and insisted that we all bought our music through the click-wheel interface and small screen of the iPod itself. That's largely what Microsoft have done with insisting on tying games purchasing to the Xbox itself.

3. The points system. XBLA points are a good idea, not dissimilar to pay-as-you-go phones and other similar models, and they allow gamers under the age of 18 (and therefore sans credit cards) to participate in the network, buy games that they want with their pocket money and so forth. The problem is that points are compulsory. In trying to manage the customer journey again (thinking like a portal) they have created a barrier for consumers who simply don't want the hassle. Also the fact that the Gold subscription for online play does work with credit cards but the purchasing of games does not probably creates consumer confusion and therefore aversion. It should be as easy as one-click to buy a game on XBLA.

It should be noted here that I don't think Microsoft are trying to be evil or mean about who gets to make games for Live. There is, after all, the example of XNA that shows that they are at least trying to embrace with the content in some shape or form. I just think that they can't seem to get the portal model out of their heads, and that's what's killing them.

So Is It Too Late?

Is it too late for XBLA? Well I hope not, but I suspect it is. Microsoft increasingly have competition from Sony (whose online play is free after all) and now Nintendo - who have announced a very interesting scheme for WiiWare that is squarely aimed at the sorts of innovative small developers that Microsoft wanted to attract but ultimately repelled with their portal structure.

Microsoft had an early-market advantage with XBLA 3 years ago, but their competitors have now matched (and may supercede) their offering. And with sales of the 360 console itself being caught by PS3 and out-classed by Wii, I would imagine there isn't much of an appetite in Redmond for large-scale changes to the system.

Ultimately it comes down to whether Microsoft as a culture really has the ability to think in an aggregator mindset, and whether they have a continued appetite to be in the console business at all.

Solutions

If I were to propose some solutions, they would be these:

1. Build a web portal that allows consumers to find, buy and recommend games to each other. Change the Xbox 360 Dashboard to allow syncing of web activity and Live activity such that if I buy a game via the web portal, my 360 will download that game automatically the next time I log on. Decoupling game purchases from the console dashboard is the one problem that they really need to solve.

2. Allow consumers to buy games via their credit card directly. This ties into the web portal idea, with the overall approach being to allow easy purchases with as few clicks as possible.

3. Don't de-list content. Instead provide better filtering tools on the Xbox's portal.

4. Provide a simple means for users to rate games directly rather than relying on professional reviewers. Tie this in with the filtering tools in suggestion #3.

5. Stop throttling releases. It is likely that throttling has built up a regular enough audience who now check back every week for the new game, but that is small potatoes compared to the damage that throttling causes.

6. Simplify the distinctions. At the moment there at least two strands of Live's online games proposition (Xbox Classics and XBLA) and soon XNA will be a third. These are pointless distinctions that make lots of sense to a marketeer or someone who works for Microsoft (again: it's "journey" based thinking) but make no sense to consumers.

To a consumer it's all just "games" and it's better for them if Halo and Hexic are sitting beside each other in the list than having to understand Microsoft's logic in order to be able to overcome their own aversion. This especially applies for XNA, which, going on the current model, is likely to only ever be of interest to XNA members owing to the levels of aversion that it will cause.

7. Fix the developer deal. Royalty-changes were an accounting-based manoeuvre but they have proved horrendously unpopular with the development community. Now that Microsoft has real competition from Nintendo and Sony, developers are looking elsewhere to see which network offers the best deal. And that doesn't even begin the cover the possibilities if developers look even further afield to iPhone, Facebook and many other markets that offer a much better cut of the action.

Conclusion

As you can see, Microsoft have effectively hoisted themselves by their own petard when it comes to XBLA. In trying to manage consumers and overcome what they believed was an image issue, they have created a network that organisationally can't actually sell a lot of games. Their solution is to reduce the catalogue, but this is essentially an admission of failure on their part.

With the 360 probably having peaked in terms of overall appeal and other console providers and technology companies now delivering credible alternatives, it is up to Microsoft to rethink their whole strategy and decide whether this is a sector of the business that they really want to be in any more.

[Tadhg is the senior game development manager for an interactive TV platform based in the UK. He has previous worked as a lead designer at Climax and scene designer at Lionhead. Tadhg also writes irregular articles for his industry blog.]