Microsoft's (NASDAQ:MSFT) decision to rid Windows 8 of the Microsoft Points currency system appears to be just a part of the company's planned updates. The Xbox could soon be rid of the mock currency as well, according to The Verge.
Traditionally, users looking to make purchases via Xbox Live would have to use the credit card associated with their account in order to purchase Microsoft Points in set blocks. From there, the user could then use this pseudo-currency to purchase movies, music, additional content for games, and more.
While this seems like a minor hassle in order to complete a purchase, users have long been irritated by the redundancy of the system, which is not unlike using a foreign currency exchange. The difficulty in assigning a true monetary value to a single Microsoft Point, as opposed to blocks, has also proven to be a point of frustration.
As a fan of Activision's (NASDAQ:ATVI) Call of Duty series, I've found myself frequently counting down the hours along with friends for the release of new downloadable content. Cool factor aside, when the download finally released and I would be ready to jump right into it, more often than not, I had forgotten to stock up on Microsoft Points in advance.
As millions of fanboys like myself began to delve into their newly acquired content, I would then have to fight with the overcrowded servers in order to purchase my points. If the content was 1,200 points, and the available blocks were being sold in units of 400, 800, or 1,600, I would be required to either spend more money on an unwanted excess of points, or go two rounds against the servers, and re-enter a credit card number, only to then be able to purchase the download with my finally acquired points.
User friendly? Not so much.
Rumors of Microsoft Points' extinction have been around for years, however, and with Microsoft set to reveal its new console on May 21, the decision to nix the currency could be critical. In the age of one-click purchases, the need to pay real money in exchange for fake money before being able to make a purchase won't fly for long.
Additionally, next-generation consoles are expected to become the juggernaut of the living room. Beyond video games, Xbox has already integrated Netflix (NASDAQ:NFLX), movies, music, and some live sports, thanks to a deal with ESPN. Pay-per-view, iTunes (NASDAQ:AAPL), and movie rentals don't demand you convert your real cash before making a purchase, and if Microsoft Points are kept around, the barrier to purchase they create could be detrimental to Microsoft's ultimate goal.
"We now have a tremendous opportunity to transform [the Xbox] into the center of all things entertainment -- from games, music and fitness to news, sports, live events, television series, and movies -- so consumers have one destination for all their entertainment needs," said Nancy Tellem, who joined Microsoft in 2011 to lead the effort to develop an Xbox studio.
The plans to switch to real currency could be announced in June at the annual Electronic Entertainment Expo, colloquially referred to as E3.
Gift cards, credit cards, and debit cards should all be supported with the new system and the money will be usable within the Windows Store, the Windows Phone Store, and on the Xbox.
By allowing the user to use the same credit within each of the stores, Microsoft finally makes the purchasing process as simple as it should have been all along. It also begins to blur an important line by making your console, phone, and computer seem more like one seamless system, rather than three separate entities.
Sony's (NYSE:SNE) PlayStation Store, meanwhile, already utilizes cash and just one network, within which users of their PlayStation 3, PlayStation Vita, PlayStation Portable, and the PlayStation Mobile can all make purchases, some of which are accessible on multiple platforms.
While Microsoft may have been beaten to the punch, it is by no means too late. The shift to actual cash will be crucial, as Microsoft's ability to maximize profit in the upcoming console generation will rely heavily on whether or not users can buy into the idea of an Xbox becoming their epicenter of home entertainment, and ease of purchase is definitely a factor.
This article by Jake Barach was published on Minyanville.
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Disclaimer: The views represented on this blog are those of the individual authors only, and do not necessarily represent the views of Schaeffer's Investment Research.