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Sony never competed with Xbox Live, and that's how it won

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Sony's E3 2013 press conference is legendary.

Microsoft was struggling due to customer anger and confusion over the plans for the all-digital, heavily managed DRM system that would run the Xbox One, and the system's price was announced to be $500.

Sony responded with a series of blockbuster announcements during its presentation. The PlayStation 4, a more powerful system than the Xbox One, would be sold for $400 at launch. You could share games with friends, and freely buy and sell used games. There would be no invasive DRM.

PS4

Sony gave fans everything they had hoped for, and the feeling in the room was electric. Sony began a victory lap that day that still hasn't really ended.

The company also snuck in a little detail: You would now have to pay to play games online.

This should have been a disaster

"The main pillar for the PS4 will be online play. We're developing many new ways to play and connect which requires a large investment of resources," Sony's Shuhei Yoshida explained in an interview with Weekly Famitsu, translated by Kotaku. "Considering the cost, to try to keep such a service free and consequently lower the quality would be absurd. We decided that if that's the case, then it would be better to receive proper payment and continue to offer a good service."

So if you wanted to play PS4 games online, you were going to have to pay for a PlayStation Plus account. That's a huge step backward, right?

PlayStation Plus launched long before the PS4 was released, and Sony had already found the secret to keeping players happy: Give them games.

Sony's Jack Buser gave the following interview in 2012 to GamesBeat:

Buser explained that Sony has done tons of research and came to a conclusion: "Gamers want games."

The executive even laughed at the absurd obviousness of that statement.

"In retrospect, it seems like, yeah, of course. Gamers love games," Buser said. "But we came to that conclusion through a mountain of data, and we really landed on this idea that not only are we going to put free games on the service, but we're going to put great free games on the service."

Online play was free on the PlayStation 3, but paying for PlayStation Plus gave the subscriber discounts and free games. All Sony did was move online play to the PlayStation Plus subscription and add "free" PS4 games to the mix. This changed the optics on the E3 announcement substantially; you weren't paying for online play so much as you were signing up for a subscription service that gave you free games monthly across every viable Sony system.

Resogun, one of the best PS4 launch titles, was "free" if you were a PlayStation Plus subscriber. You were given a free month of the service with the purchase of the system. You needed a subscription to play online, and those free games were nice, and there you go.

Sony had done what may have been impossible for other companies: They gated a once-free service behind a paid subscription while making a good amount of their players happier.

The online play barely matters

I recently tweeted that PlayStation Plus had become less about paying for online play and more about a sort of Loot Crate for games. You pay your money, and every month Sony gives you a bundle of free games across three systems and an array of discounts on other content.

The response was pretty amazing: My timeline was filled with people who said they had forgotten they need PlayStation Plus to play online on PS4. Sony never had to compete with a service that offered online play at all, it merely had to change what people expected out of a console-based subscription service.

I've been asking people why they pay for the service, and almost every response talked about the monthly free games. No one complained about Sony gating online play behind a pad service; they were mostly happy that they put in the money for the service while feeling like they got more value in terms of games and discounts out of it.

That's clever on Sony's part. By mostly offering smaller, independent games they reduce the cost of offering these games. Developers don't like to talk about how much they get paid for offering a "free" game on the service, but they do make money from the deal. That's on top of the huge publicity push that you get when your game is one of the monthly free releases.

Rocket League would likely have been a hit no matter what — the $20 PC version is topping the Steam charts right now — but since every PlayStation Plus subscriber gets it for "free," the buzz on PS4 has been deafening. You can get it for free right now, so why not at least try it? The game's audience has grown substantially due to PlayStation Plus, and the developers get what's likely a guaranteed minimum payment from Sony.

What Sony has done is remarkable. They didn't launch their own Xbox Live; they set up a service that offers a variety of benefits that their players want. PlayStation Plus subscribers pay less for many games, they get free games every month and they get to play all these games online. I've been contacted many times by players who feel guilty because they're getting games for free that they'd be willing to pay for. They want me to reassure them that the developers are getting paid.

Consider this your assurance. Everyone seems pretty content with the situation, on the whole.

This was a pretty amazing bit of judo

Sony had to catch up to Xbox Live, and the result was putting Microsoft in a position to have to catch up to Sony with Xbox Live. That's a great turnaround, and it shows how agile Sony can become when it gets hungry for the number-one slot again.

Two nights ago I went into the basement to buy two games everyone was talking about: Rocket League and the PS4 version of Journey. I found that Journey was "free" due to the cross-buy service; since I had already paid for it on PS3, the upgraded version was free. Rocket League was "free" due to my PlayStation Plus subscription. I felt like Sony had just given me $35 back for being a loyal customer.

That's not what happened, though. I had purchased two pieces of Sony hardware and the company's subscription service, and in the past I had purchased a game. Sony just decided to reward me for doing so, after I've already given them so much money. I'm locked into the Sony ecosystem, so if I jump ship to another console or let my PlayStation Plus subscription lapse, I lose all these benefits. But it feels amazing to be "given" this amount of content on a regular basis.

PlayStation Plus beat Xbox Live by refusing to compete on Microsoft's terms. It became an amazing service by offering content and deals, instead of just gating online play. Sony has put us all in handcuffs, but they're of the silver variety. Rewarding players while locking them down to your system while offering content that makes them happy is quite the trick, and Sony has mastered it.