Microsoft MSFT recently rolled out an Xbox Series X update that allows users to play many more Xbox One games offline without a mandatory DRM (Digital Rights Management) check. The 2208 update released earlier this month doesn’t force users to run an online compatibility checker to play a game from an Xbox One disc.

DRM refers to online checks on platforms such as iOS, Android, Windows and Xbox to ensure that the user actually owns the license for the content being accessed. Without DRM, publishers could potentially lose millions of dollars in scenarios where users illegally share content, which could result in a less sustainable game industry.

Xbox One and Xbox Series X|S DRM has been criticized for its aggressiveness, effectively preventing users from playing many single-player games in offline situations, such as power or internet outages.

The change, which is not listed as a feature of the 2208 update on the Microsoft site, was confirmed by Eden Marie, Xbox’s technical leader, who tweeted that the check mark was removed as it was not necessary in the vast majority of cases when playing a cross-generational game on the Series X.

Users can now install the Xbox One version of a game directly from the Xbox One or cross-generation disc and start playing. Internet is required to download updates or expansion packs for the Series X.

Microsoft Corporation Price and Consensus

Microsoft Corporation Price and Consensus

Microsoft Corporation Price Consensus Chart | Quote from Microsoft Corporation

Boring consumer spending on video games weighs down prospects

Microsoft has been working on making it easier to launch and play games on Xbox in general. It recently started testing badges on the console’s home screen that indicate at a glance whether a game is currently playable.

For fiscal 2023 of the first quarter, Microsoft expects low- to mid-single digit game revenue to decline as a result of declines in first-party game content on Xbox consoles.

As for games that may be coming to Xbox Game Pass, ads for titles such as Elden Ring, Soul Hackers, and GTA V have been spotted in the Xbox store. All of these titles also seem to have recently been made xCloud compatible.

The numbers reflect a broader contraction in consumer spending on video games. Americans spent $12.4 billion on video games in the second quarter, according to market research firm NPD, down 13% year-on-year.

In the three months ending in June, Microsoft, Sony SONY and Nintendo NTDOY each had disappointing results in their respective gaming businesses. In the last reported quarter, Microsoft’s gaming revenues were down 7% (down 5% in cc) due to declines in Xbox content and services and Xbox hardware.

Nintendo saw a 15% drop in profits in the April-June period. The company behind the super mario franchise claimed that the weak performance due to the global semiconductor shortage affected the production and sales of Switch consoles. Nintendo sold 3.43 million units of its Switch portable console in the quarter, a 23% year-over-year decline, while software sales fell 8.6% to 41.4 million units.

Sony sold 2.4 million PlayStation 5 consoles in the quarter, slightly more than the 2.3 million sold in the same period a year ago.

Microsoft has hit back at Sony’s recent claim that its impending acquisition of Activision Blizzard ATVI is anticompetitive and that the Duty franchise affects users’ console choices and lacks a real rival.

While the US Federal Trade Commission continues to scrutinize the deal in private, foreign regulators, such as those of Brazil and New Zealand, are publishing filings for public consumption.

Microsoft’s strategy of not distributing Activision Blizzard games on rival consoles would only be profitable for this Zacks Rank #3 (Hold) company if the games draw a large number of players to the Xbox ecosystem, resulting in revenues that offset the losses by unselling these titles on rival consoles. You can view the full list of current Zacks #1 Rank (Strong Buy) stocks here.

Special report: the top 5 IPOs for your portfolio

Today you have the chance to step into the ground floor of one of the best investment opportunities of the year. As the world continues to take advantage of an ever-evolving internet, a handful of innovative technology companies are about to reap huge rewards – and you can put yourself in a position to make money. One of them will disrupt the online communications industry. Brilliantly designed for creating online communities, this stock is poised to explode when made public. With the strength of our economy and record amounts of cash flowing into IPOs, you don’t want to miss this opportunity.>>View Zacks’ hottest IPOs now

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

Microsoft Corporation (MSFT): Free Stock Analysis Report

Activision Blizzard, Inc (ATVI): Free Stock Analysis Report

nintendo co. (NTDOY): Free Stock Analysis Report

Sony Corporation (SONY): Free Stock Analysis Report

Click here to read this article on Zacks.com.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.