Once that secondary market is removed you can suddenly profit from every copy of your game sold, and as profit margins rise it’s possible we’ll see prices drop. Some stodgy publishers will likely stay with the $60 model, but they’re dead companies walking already. The smart companies will see this opportunity to play with pricing and see what works and what doesn’t.

Ben Kuchera at Penny-Arcade has an optimistic take on Microsoft eliminating the used game market.

I’d love to believe this, but I think the carrot and stick are out of whack here. If you’re going to eliminate the ability for me to buy and sell used games, then you have to offer a reasonable tradeoff. “Oh, I can’t resell my game anymore, but now my game is cheaper/downloadable/more convenient.”

What Microsoft is offering is a step backward from Steam. You still have to buy a physical disc, only now that disc is just an installer and your copy is linked to your $50-a-year Xbox Live account. But what if you lose the disc? Do you have to re-buy the physical disc? Can you just download it? And what happens in the future when Xbox Two comes out? Will my games still work/still be tied to my account?¹

All of Microsoft’s responses are about ways you can kind of, sort of approximate the convenience of the current setup with their new system, but they don’t actually explain why their new system is better for me as a consumer.