[BlackAura]

While you might be right in part, Microsoft still shot themselves in the foot with this one.

Some parts of the original plan were actually a good idea, if you think of the Xbox One as being purely for digital downloads. It's very similar to Steam, but with a few differences. Better in some respects (shared library, which Valve are reportedly considering), worse in others (can't work offline).

The problem is that they were applying the exact same system to physical copies of a game. While their original plan was actually pretty good for digital distribution (it's a little more permissive than the Xbox 360), it's awful for physical copies. The physical copy is nothing more than a CD key and a backup so you don't have to download the game. It completely violates everyone's expectations of what a physical copy is, and what you can do with it.

Microsoft explained all this very poorly. Their message was basically "here's all the ways we're going to restrict Xbox One games, all the extra requirements to play Xbox One games, and all the things you used to be able to do that you can't anymore". The benefits were an afterthought, barely mentioned, and they waited until E3 to even do that.

What they probably should have done is separate physical and digital copies. Have digital copies work more or less the same as the original announcement, and physical copies work like they do on the Xbox 360. Then it becomes a choice. If you want all the benefits of digital distribution (and make sure you play those benefits up at every opportunity), you can do that. If you don't, get a physical copy, and it works the same way it always has.

Although Microsoft do clearly want to move towards only digital distribution, they can't yet. The restrictions on physical copies are basically just a response to publishers, who are convinced that the used game market is the cause of all of their problems. They're wrong, of course. Just as they were wrong about piracy being the cause of all their problems, and just as they were wrong about game rentals being the cause of all their problems before that.

As for the pricing thing - that will not happen.

As far as publishers are concerned, US$60 for a game is a bargain. They'd love to charge more, but people won't pay more than that. There is no way they'd ever reduce that, even if they eliminated used games entirely, and had zero distribution and publishing costs. They've already established that people are willing to pay US$60 for a game, and the sale price of an item is simply whatever people are willing to pay for it. If they reduce costs, why would they reduce the asking price? If they increase sales by removing used games entirely, why could they reduce the price? That's not how businesses work.

The only way game prices will come down is if there's some kind of competition. Game publishers will charge the same for an Xbox One or PS4 version of a game, because the publishers control the prices, so there's no competition there. New games currently cost the same on Xbox 360, PS3, and Steam, after all. Retailers don't really have much scope for reducing prices, because they have very little margin on new games, so there's no competition there. Used games would no longer be competing either, because publishers would just ask for some (probably very high) cut of all used game sales. There's no way to set up a competing online shop for Xbox One games, and no way to publish an Xbox One game without going through Microsoft, so there's no chance of competition there either.

The only potential source of competition is between games. Publishers have demonstrated that they are not willing to do this. Not on consoles, anyway. Competition between games is what pushed mobile game prices down, even though all sales went through the same app store. That happened because the mobile space was dominated by smaller developers, mostly self-funded and self-publishing, who needed to compete or die. That's not the case with the major publishers and developers.

Steam faces competition from retailers, from other online shops (either selling physical or digital copies), from all the publishers and developers who self-publish, and there's a great deal of competition between games because of the sheer number of smaller publishers or independent developers, combined with the absolutely enormous available back catalog, most of which still works on modern PCs. That, combined with various developers (Valve being the most obvious) who aren't even trying for a US$60 price point in the first place. That's why Steam has decent prices, why games cost less over time, any why they have such frequent sales. Competition, not because of restrictions on what you can do with the games.