Decoding the digital age
When Software Stopped Being Something You Own
Software
When Software Stopped Being Something You Own
With PlayStation and Xbox making seemingly opposing moves with regards to ownership, we examine the wider trends of ownership within the software industry.
Microsoft’s latest Xbox announcement is interesting for reasons that go well beyond gaming. From the end of August, owners of many Xbox One and Xbox Series X games will be able to insert a physical disc into their console and claim a corresponding digital entitlement. Where supported, that can unlock features such as cloud gaming and Play Anywhere, while the original disc continues to work as before.
The move comes shortly after, and possibly in direct response to Sony’s announcement that it will stop producing physical discs for new PlayStation games from January 2028. Both companies are responding to the same long-term shift in consumer behaviour, as digital distribution becomes dominant and physical media increasingly peripheral, but they are doing so in notably different ways. Sony is treating digital convenience as the natural successor to physical ownership, while Microsoft, at least in this instance, is allowing the two to coexist, with the disc remaining useful even as digital services are added on top.
The distinction is worth looking at beyond the games industry because much of the software market has spent the past 15 years moving towards arrangements in which continued use depends on an ongoing relationship with the supplier. Software has become easier to deploy, easier to update and more capable as a service, but customers are also less likely to acquire something they can keep using indefinitely once they have paid for it.
From versions to access
For much of the history of personal and enterprise computing, software behaved economically like a product. Customers bought a copy of Microsoft Office, AutoCAD, Photoshop, accounting software or a particular version of an enterprise platform. There were licence agreements involved, and customers did not own the intellectual property itself, but the practical relationship was straightforward enough: a customer paid for a version, installed it and could usually continue using that version for as long as the surrounding hardware and operating systems allowed.
Support might eventually end, while newer releases offered better features, stronger security or compatibility with newer systems, but upgrading largely remained the customer’s decision. If an existing version continued to do what was required, there was no automatic need to replace it simply because the supplier had released something newer.
Software-as-a-service changed that relationship. SaaS made deployment easier, reduced the burden of maintaining local infrastructure, enabled continuous updates and made collaboration far simpler. It also made possible products that would have made little sense as standalone desktop applications. Slack, Salesforce and Figma depend on shared infrastructure, continuous connectivity and constant development in ways that older packaged software did not.
Those advantages explain much of SaaS’s success, but they came with a commercial change that was less obvious at first. Customers increasingly stopped paying for a particular version and started paying for access over a defined period. Under the older model, someone who did not want the latest release could stay with what they already had. Once the product itself is delivered as an ongoing service, declining new commercial terms can mean having to leave the product altogether.
Possession is not the same as control
Software ownership has always been complicated by the fact that buying a licence is not the same as owning the underlying intellectual property. What has changed is the extent to which other rights that once tended to travel together have been separated. A customer may have the software installed on its own infrastructure without having an indefinite right to keep using it, or may retain its own data while losing the ability to continue working with it through the same application.
01
Permanence
Can I pay once and keep using this version?
02
Possession
Does a functioning copy actually exist under my control?
03
Independence
Can I continue using it without the vendor continuing to participate in the transaction?
Atlassian provides one of the clearest examples. The company has been moving customers away from its self-managed Data Center products and towards Atlassian Cloud. New customers can no longer purchase most Data Center products, existing customers face further restrictions from March 2028, and most Data Center products are scheduled to reach end of life on 28 March 2029, when the licences will expire and deployments will become read-only rather than simply unsupported.
A business might own the servers on which the software is installed, along with the network, storage and database, while its own information may be sitting on infrastructure inside its building or within its own cloud environment. Even so, it can lose the ability to use the application actively once the licence expires. Owning the infrastructure and possessing the installed software therefore no longer necessarily gives the customer the final say over whether the system remains operational.
Older perpetual VMware licences show that this is not an inevitable consequence of software reaching the end of support. Broadcom has moved newer VMware products towards subscription licensing, but existing qualifying perpetual licences do not stop functioning simply because support expires. Customers lose patches, updates and technical assistance while retaining the ability to run the software they previously acquired. The supplier can stop maintaining the product without also withdrawing the customer’s ability to use it.
Why vendors preferred the new model
The move towards subscriptions was not simply an attempt to exercise more control over customers. Perpetual software had genuine commercial drawbacks for vendors, particularly because each new release had to persuade customers to buy again. A company could spend heavily developing version eight only to discover that a large part of its customer base was still perfectly happy with version seven.
Subscriptions remove much of that uncertainty. Customers renew rather than repurchase, revenue becomes easier to forecast, and suppliers can expand existing accounts through additional users, higher tiers or greater usage. Investors have also consistently valued the predictability of recurring software revenue more highly than businesses dependent on periodic bursts of licence sales.
Autodesk was unusually explicit about the transition. It began withdrawing new perpetual licences in 2016 and now sells its software through subscriptions. At the time, the company promoted lower upfront costs, flexibility and easier access to cloud services, while its financial reporting increasingly focused on recurring revenue as the old licence model was phased out. Existing perpetual customers retained their previous usage rights, but new buyers gradually lost the option to make the same kind of purchase.
Adobe followed a similar path when Creative Suite gave way to Creative Cloud. Its own financial filings described Creative Cloud as superseding the historical perpetual-licensing model and said that the change would make revenue more recurring and predictable. Adobe also recognised some of the tensions involved, including customer concerns about pricing over time and continued access once a subscription expired.
Customers gained from these changes as well. Subscriptions can reduce upfront costs, deliver security improvements more quickly and keep users on current versions. In regulated or fast-changing areas, continuous updating can be particularly valuable. Accounting software, for example, may need to keep pace with tax rules and reporting requirements in a way that an indefinitely frozen desktop application cannot.
The combination of better delivery and stronger economics goes a long way towards explaining why SaaS spread so widely. Less attention was given to how much influence over the continuing use of software moved back towards the supplier at the same time. Once a business depends on a service rather than a version it can retain, the vendor remains involved not only in maintaining the product but also in setting the terms on which access continues.
The rights that disappeared quietly
The most obvious change was the move from one-off purchases to continuing payments, but the larger effect often becomes visible only when the relationship changes. A customer with a perpetual licence could decide that a new version was too expensive or offered too little additional value and remain on the software it already had. A SaaS customer facing a significant price increase may instead have to choose between accepting it and undertaking a migration.
For important software, that migration can involve much more than replacing one application with another. Years of historical information, integrations, staff training, workflows and internal processes can all become tied to the product. The resulting friction can give subscription suppliers substantial pricing power, particularly where the market offers few credible alternatives or where moving would require significant organisational change.
Resale is another difference that receives relatively little attention. A physical game can be sold, lent or given away, while a traditional perpetual software licence could, in some jurisdictions and under certain conditions, also retain residual value. In the 2012 UsedSoft v Oracle judgment, the Court of Justice of the European Union found that the supplier could not prevent resale of qualifying licences simply because the software had originally been downloaded rather than supplied on physical media.
Subscriptions generally leave nothing comparable to transfer once access ends. Removing that residual value changes more than the payment schedule; it also eliminates much of the secondary market that can exist around products customers retain. The original supplier remains economically involved for as long as the software is being used, rather than having to persuade the customer to return for another purchase.
The same shift becomes more significant when a supplier fails. An old desktop application whose developer went out of business might become unsupported and increasingly insecure, but the installed software could continue working. Where an important business function depends on SaaS, the continued availability of that function may also depend on the continued operation of the company providing it.
Software escrow has consequently expanded beyond simply holding source code. In critical environments, continuity planning may also involve deployment configurations, databases, credentials and infrastructure templates that would allow a service to be recreated if the supplier failed. Preserving access to traditional software could once mean keeping an installer, a licence key and suitable backups; maintaining continuity for a cloud service may require preparations for reconstructing parts of the environment in which the service operates.
Taken together, these differences show how much the practical relationship between supplier and customer changes when software moves from a perpetual licence to an ongoing service.
| Comparison | Perpetual licence | Subscription / SaaS |
|---|---|---|
| Payment | Typically a one-off payment for a particular version | Recurring payment for continued access |
| If payments stop | The existing version can usually continue to be used | Access may end or functionality may be restricted |
| Where it runs | Often installed locally or on infrastructure controlled by the customer | Often depends on vendor-controlled cloud infrastructure |
| Upgrade decision | Customers can often remain on an older version | Updates and changes are largely determined by the supplier |
| Switching leverage | Customers may continue using the current version rather than migrate | Rejecting new terms may require migration to another product |
| Residual value | Some licences may retain transfer or resale value | Usually little or nothing remains to transfer when access ends |
| Supplier failure | Installed software may continue to operate without support | Continued use may depend on the supplier’s infrastructure remaining available |
| Customer control | Greater ability to retain and continue using the acquired version | Continued use depends more heavily on the supplier and its commercial terms |
The move may not stop at subscriptions
AI is pushing software pricing further away from the idea of buying a durable product. Traditional SaaS has usually been sold through seats or tiers, but those measures become less useful when software is carrying out work itself and costs are driven by tokens, actions or completed tasks rather than simply by the number of people with access.
Usage or outcome-based pricing may in some cases align costs more closely with the value customers receive, but it also extends the same dependency already created by SaaS. A greater proportion of what the customer is buying exists as an ongoing capability delivered by the supplier rather than something that can be retained independently. That makes portability, continuity and contractual protections more important if the commercial relationship changes or ends.
Durable rights as a selling point
This is where the Xbox decision becomes more interesting than a simple argument about physical versus digital games. Microsoft is not restoring some pure form of software ownership. A digital Xbox entitlement still depends on Microsoft’s accounts, infrastructure and licensing systems, cloud gaming depends on Microsoft continuing to provide the service, and modern physical games can themselves rely heavily on online patches and remote services.
What Microsoft has done is avoid making those digital benefits conditional on abandoning the older form of ownership. The physical entitlement can unlock additional services while the original disc remains useful. It is a relatively modest change, but it runs against a much broader software trend in which new delivery models have often been used to replace rather than supplement rights customers previously enjoyed.
There are some signs of the same idea elsewhere in software. Microsoft continues to sell Office 2024 as a one-time purchase alongside Microsoft 365 and maintains Office LTSC for organisations that need relatively static, on-premises software. Microsoft describes LTSC as a perpetual licence intended for specialised situations where systems may need to remain disconnected or unchanged for long periods, and has committed to another release after Office LTSC 2024.
Companies such as 37signals have gone further by experimenting deliberately with self-hosted software outside the conventional SaaS model. Its Campfire product can be run on a customer’s own server or cloud infrastructure and is now available as open-source software, making independence from the original supplier part of the proposition rather than an unfortunate relic of older technology. 37signals’ ONCE Campfire project
These remain exceptions, but increasing dependence on cloud services could make some of the rights removed during the transition to SaaS more valuable again. Perpetual fallback rights, guaranteed data export, self-hosting, offline operation, software escrow and the ability to continue using a stable version after the commercial relationship ends could all become meaningful points of differentiation for customers concerned about resilience or long-term control.
None of this requires a return to the software industry of the 1990s. Cloud services can continue to provide collaboration, constant development and remote infrastructure without every product necessarily imposing the same degree of ongoing dependence on its supplier. The more useful question is what rights remain with the customer after purchase, and which still depend on the supplier agreeing to provide access.
Over the past decade, software companies have steadily reduced the opportunities for customers to acquire those durable rights. The commercial incentives are clear: subscriptions create recurring revenue, preserve an ongoing relationship with the customer and strengthen the supplier’s position once data, workflows and integrations make switching difficult. Where alternatives are limited, that advantage can become particularly significant. Xbox’s latest move is interesting because it points, however modestly, in the opposite direction, using digital convenience to add value to an existing form of ownership rather than as a reason to remove it.
