An arrangement for effective updating of video game terminals uses a security key device which is capable of operating next major generation software that at the time of sale or distribution of the security device is not available. Once this software is available, the security key with this forward compatibility to the next major generation of software, allows the owner to update any terminal having the security device. Therefore, existing product, both terminals and/or software upgrades can be sold with the capability for the purchaser to upgrade without return of the security key device. Software can be made generally freely available as it requires a security key device to function. This system is convenient and effective, and allows continued sale of product up to the release of the next major generation of software. The purchaser is buying a next generation key and as such, is buying product that is not about to be replaced.