Exclusive: Microsoft to discontinue its virtual currency system Microsoft Points
Microsoft's proprietary virtual currency system, Microsoft Points, will be phased out by the end of the year, according to a source with knowledge of the company's decision.
Context & Ripple Effects
The report — a single sourced claim that Microsoft will phase out Microsoft Points by end of 2012, still unconfirmed by the company — lands mid-way through a visible retrenchment at Microsoft. It killed off consumer products before, including MS Money in 2009, and last July it folded the Games for Windows Marketplace into Xbox.com, concentrating its digital commerce under the Xbox brand.
First-order effects
- If the phase-out proceeds, every user holding a Microsoft Points balance faces conversion or expiry, and Microsoft has to migrate point-denominated pricing on Xbox Live Arcade and Zune-style storefronts to local-currency price tags.
Second-order effects
- Publishers selling through Xbox Live would have to reprice content in real money rather than fixed point tiers, loosening Microsoft's control over perceived price points while simplifying cross-border pricing ahead of the Windows 8 rollout the company is engineering for mobile-connected devices.
Third-order effects
- A successful retirement of Points would mark the end of the closed-virtual-currency era for major console platforms, pushing storefront economics toward transparent cash pricing and making balances portable liabilities Microsoft no longer carries.
The trend: Digital storefronts are abandoning proprietary virtual currencies in favor of direct cash pricing as console, PC, and mobile commerce converge into single account systems.