Jan 25, 2012

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Should Microsoft Abandon MS Points?

Should Microsoft Abandon MS Points?

Recently, a rumor surfaced that Microsoft was considering abandoning the Microsoft Points system and going to a real-currency model, like what Steam or PSN use. While this might be a good move for gamers, could it potentially hurt Microsoft (and its developers)?

Recently, the European developer of the digital horror title Amy was faced with a dilemma. Because of currency exchange rates affecting Microsoft Points, the game potentially would be sold for the equivalent of $3 less on the US XBL (800MSP) versus US PSN. The dev put it to a vote: how much did users want to pay for the game? The $10 equivalent to the Microsoft Points price, or the $13 the dev intended to charge?

The lower price did come with its own cost, however: users would have to wait an extra week to play the game on PSN if they voted for $9.99 instead of $12.99. Most fans seemed willing to wait, as the poll results came in a few days later and the developer decided to keep the US price as $9.99 on PSN.

So in this instance, gamers actually benefited from the Microsoft Point system (in the US, anyway). However, most of the time, because you must buy points in bundles (as Nintendo does with its points) and can’t simply pay for the item out right (as you can on Steam, or PSN if the amount is more than $5), you’re often left with extra points, sometimes in strange denominations. This means you must either buy another pack of points to have enough to make a purchase, or purchase something you may not have bought otherwise, like avatar items or indie games.

If Microsoft went to currency over points, assuming they didn’t continue to force you to purchase blocks of currency, it would mean that Microsoft could potentially lose big money on avatar purchases. Without having that extra 80 or 120MSP in your account, would you be more willing to pass on that pet or hat? There might be some gamers who would continue to make these purchases, but more likely you would see an overall decrease in the amount of avatar items sold.

Likewise, it’s a sad fact that while the Xbox has many great indie games, most of these go overlooked. Often times, many gamers will only purchase an indie title as an alternative to spending that leftover MSP (rather than purchasing an avatar item, for example). This could potentially hurt indie devs who already suffer with less-than-stellar support from Microsoft.

Gamers, however, other than benefiting from spending only the money they want to spend, could more easily understand the prices of items they wish to buy. Instead of having to think, “80 MSP = $1,” they could simply see the price: $1 (or $0.99). While this transparency would benefit the consumer, it could also potentially harm Microsoft and its developers. Spending  800MSP, even if you know it means $10, is not the same, psychologically, as spending $10. Just as there’s a psychological effect to seeing a price as $10.97 instead of $11, “disguising” prices behind points has its own effect on the consumer. Someone is more likely to spend points than “real” money, and this could mean gamers might be less willing to take chances on indie or lower-profile games and items, not to mention probably less likely to spend as much on avatar accessories.

If Microsoft did make the shift to real currency, and consumers did start spending less, could this mean we’d see Microsoft (and its developers) changing their strategy, or even their pricing, to make up for the difference? This could potentially go either way. Indie devs might be forced more than ever into that $1 price range in an effort to entice gamers (as is done with iOS apps), while bigger-budget games might have to bump their prices up (say, from $10 to $15, or $15 to $20) in order to make up for potentially lower sales. We might also see more bundling of indie games, as we do on PC and PSN. The currency exchange effect would also dissipate, so a game like Amy would have been $13, flat, instead of the $10 it ended up becoming, meaning gamers might end up paying more in some instances.

Personally, I prefer the real-money system. I hate having to buy points in bundles, and I have actually not purchased certain games because I didn’t have enough points (by maybe only 100) and didn’t want to have to buy another twenty-dollar’s worth in order to get one game. I’m probably not the only one who has experienced this (on either Xbox or Nintendo platforms). In these instances devs have actually missed out on potential money they may have had otherwise.  I also like being able to see exactly what I’m paying for something without having to think about it or hide behind a points system. Nintendo finally abandoned points with the 3DS, so perhaps Microsoft will as well.

Would the shift away from points cause enough change in consumer habits as to affect Microsoft’s bottom line? What about developers? Would larger publishers, not just indies, see a decrease in revenue from DLC, for example? Would consumers be less likely to buy that map pack for Modern Warfare 3 if it were $15 instead of 1200MSP? Would the fear of losing their market (due to a lack of leftover points) scare away indie devs from the marketplace? Obviously, we will only know the effects of the change if it happens; it seems to me that it is in Microsoft’s interest to maintain the status quo, but perhaps they will surprise us.