NEWS - Monday, December 12, 2005

Microsoft Points are Dangerous

Like Xbox Live Arcade, the Xbox Live Marketplace is another underappreciated aspect of the Xbox 360 experience. Using a form of currency dubbed “Microsoft Points,” gamers can buy Arcade games, gamer icons, console themes and other digital bric-a-brac to customize their gaming experience. Microsoft Points can be purchased at a rate of 80 per $1 USD. Points are cool for a few reasons. Mostly, it’s clear that they’ve been very carefully thought out. The exchange rate itself appears to have been carefully chosen so that points don’t line up against most of the major world currencies in a simple ratio. A US Dollar buys 80. A Yen buys .67. A pound buys 120. A Euro buys about 67, and so on. That’s important because it distances the gamer from the financial impact of the purchase. If the conversion to dollars is simple, every transaction will be evaluated in real dollar terms. If the conversion requires math, most people will choose not to perform the conversion and will presumably spend more freely. Second, the structure of Marketplace minimizes credit card transaction fees that Microsoft needs to pay. They’re not passing those savings on to us, but the more gamer spend that we keep out of the pockets of middlemen—credit card companies included in that category—the more money goes into the pockets of the content creators. That’s good for the games industry, because it means existing developers will make more money. More money flowing to developers should also increase the number of firms developing games, which will in turn increase the variety and creativity of games that make their way onto our gaming devices. Sweet. Third, MS Points are going to be used across all Microsoft products. You may be able to purchase a premium Hotmail subscription with points in the future. You might also be able to use points to purchase clipart for MS Word. Given Microsoft’s intent to make points ubiquitous, we could see some nifty benefits for gaming come out of it. How about a winner-takes-all Perfect Dark Zero tournament with an entry fee and prizes collected and paid in points? Microsoft has also said that they may allow points to be redeemed for Xbox 360 accessories. We’ll see some interesting new things as a result of points. Fourth, MS Points make transactions uber-easy on the Xbox 360. After the initial annoyance of setting up the 360, points allow subsequent transactions to happen in seconds. To buy a full version of a demo game that you’ve already downloaded to your Xbox 360 hard drive takes about five seconds. It’s the fastest commerce experience anywhere online with the exception of’s 1-Click feature. And that’s why they’re dangerous. The marketplace user interface makes spending so much easier than any other shopping experience most of us have ever experienced that it’s quite possible to deplete your MSP balance before you’ve really even considered what you’re doing. It’s also just as easy to replenish your points balance with your credit card, which the Xbox 360 remembers for you. That’s how shopping should be. Now if only the geniuses at Microsoft could figure out a way to keep those pesky credit card bills from showing up.

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