With November sales of their Xbox One and Playstation 4 game consoles tracking at 3% higher than November 2013 launch rates, Microsoft Corporation (MSFT) and Sony (SNE) were set to have a decent holiday season.
However, hackers turned the Christmas celebration into a PR nightmare for the two companies.
Both Xbox Live and the PlayStation network were knocked offline by a group calling itself ‘Lizard Squad” on Christmas Eve. Both services were disrupted on Christmas day — meaning a lot of disappointed new Xbox One and Playstation 4 users.
The Xbox hack was finally resolved on December 26, with the PS4 hack keeping Sony’s PlayStation Network offline for an additional day.
Had this happened several years ago, it would have been an inconvenience, but the industry is increasingly reliant on online gaming.
The importance of that online component has become pervasive.
Many game developers extend the revenue stream of their titles by selling DLC — downloadable content that keeps players interested. Multiplayer games have evolved from split-screen local contests to massive matches that rely on Xbox Live and the PlayStation Network.
Some games, like Electronic Arts’ (EA) Titanfall, don’t even have an offline mode, so if Xbox Live is down they are unplayable. Microsoft’s Xbox One is able to leverage cloud computing to improve graphics processing and make even local games look better. Sony uses the PlayStation Network to enable PS4 users to play previous-generation PS3 titles.
In short, now more than ever, the prospect of a network outage puts console makers and game developers at risk of alienating gamers. Unfortunately, the Christmas outage wasn’t the first time we’ve seen consoles like the Xbox One or PS4 hobbled.
Lizard Squad Strikes Repeatedly
The prolonged Christmas outage of Xbox Live and PSN was Lizard Squad’s moment in the spotlight, but the hacker collective has been targeting the online gaming networks for several months. Among the disruptions attributed to the group:
- Took down the PlayStation Network on August 14, disrupted Xbox Live as well
- September 29, knocked out servers hosting the popular recent launch Destiny and Call of Duty: Ghost on Xbox One and Playstation 4
- December 1, Xbox Live disrupted
- Knocked out Xbox Live core services on December 6
- PSN inaccessible for many PS3 and PS4 users on December 9
Lizard Squad’s motives are unknown — some messages attributed to the group claim they are trying to pressure Microsoft and Sony to invest in more secure networks — but the lesson is clear. It’s all too easy for hackers to disrupt online gaming at will.
Titanfall Stumbles on Xbox One Launch
EA’s Titanfall was one of the most hotly anticipated Xbox One exclusives. The game was online multiplayer only — no offline mode — but Microsoft’s Azure servers were supposed to ensure that no matter what the load, Titanfall would remain online and responsive.
On launch day, Titanfall went down as did all of Xbox Live. Microsoft quickly claimed the two weren’t related, but even if it was a coincidence, the timing was unfortunate and showed millions of new Titanfall owners what happens when an online-only game can’t get online.
It also illustrated that hackers aren’t the only problem with online gaming.
PlayStation Network Hacked in 2011
The longest and costliest online gaming disruption to date hit Sony’s PlayStation Network in 2011.
Hackers took PSN down for nearly a full month, compromising 77 million users’ accounts and costing Sony $171 million in damages. Online gaming functions were completely unavailable during this time, DLC couldn’t be downloaded, and services like movie rentals were offline.
Besides tarnishing Sony’s reputation, the 2011 PSN hack likely cost the company PS3 sales and was blamed for leading to the shuttering of at least one game developer — who had the bad luck to release a title that leaned heavily on online multiplayer functionality the day before the network went down.
As bad as the 2011 PSN attack was, imagine what would happen today if the Xbox One or Playstation 4 were to lose all online functionality for a month? Judging by the latest outage, the results would be catastrophic.
With Great Reliance Comes Great Risk
Video game consoles have become even more important to the bottom line of Microsoft and especially Sony.
However, an increased reliance on online gaming means console gaming is at risk of disruption. An Xbox hack is tough to pull off, but taking down Xbox Live is considerably easier.
I’m not saying that online gaming is a bad thing (far from it), but Microsoft and Sony are going to have to get a lot more focused on network security if they expect the Xbox One and Playstation 4 to remain the platform of choice for gamers.
And game developers should probably rethink their strategy of making games that require an Xbox Live or PSN connection to do anything. Given recent history, charging $60 for a game that is useless when an Xbox One can’t reliably connect to Xbox Live seems like an unnecessary risk. Players are eventually going to get tired of the hassle.
In the meantime, the go-to website for Xbox One owners is the Xbox Live Status site, where Microsoft tracks the latest outages in its online services…
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
