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The Psychology of Steam Wallet & Microsoft Points
Hugh Pickens writes "Ever bought something from Xbox Live Arcade? The first time, you may have been a bit bamboozled by the process because Microsoft doesn't just let you put $15 on your credit card to buy a new game; purchases are done in 'Microsoft Points' that you deposit into a virtual wallet and you use the points to buy stuff. 'Gamers possessed of equal parts suspicion and curiosity may wonder why our gaming overlords adopted such a strange system instead of just letting us pay real money for our purchases,' writes game psychologist James Madigan. He says the real reason for Microsoft Points is that sometimes you are going to have some points left over in your account. Leaving money on the table or in your Xbox Live account makes most of us a bit uncomfortable (PDF) because it feels wasteful. 'It's similar to overeating at a buffet or doubling your paper towel use after buying the 124 roll jumbo pack,' says Madigan. 'Even though you could just let those paper towels or Nintendo Points sit there until you have a good reason to use them, spending real money on something else seems wasteful.' And Microsoft isn't the only one – Sony and Nintendo have similar systems, and Valve has even rolled out a 'Steam Wallet' for in-game microtransactions."
The extra money lying around in their bank accounts, while not spent by the customer, could earn them millions in interest.
The psychology is great, but a more simple explanation is that you have to pick a currency to price things in. Why not a virtual one rather than a real one? I can't imagine Americans tolerating Euro prices or vice versa. This way, everything's priced in points and we're happy.
I hate any system where you can buy "points" but have no way of changing points back to money. Thye know that they are on to a good thing - either you spend it, which often means adding more, or you leave it as a zero-interest loan to them (which also falls outside any financial regulations or compensation schemes should they go bust).
Lets suppose you have a website that sell Second Life avatars. You want a avatar to cost 0.30 $, but the credit card 'tax' is 0.20 $. And people buy maybe 20 in a year.
What you can do, is to make so the user buy 30 "points" paying 10 $. And make so every new avatar cost 1 point. You are still paying 0.20$ to the credit card company, but only once. With the other option you pay 0.20 * 20 = 4 $. So is paying 0.20 $ versus paying 4.00 $. Is really better to run with points.
Also, is also better for the user, so he do only one transaction, and from there, he don't have to enter his credit card details. ..that can be annoying.
-Woof woof woof!
I am in the process of selling my Wii and thus had to format the memory, back up my savegames and also remove my WiiWare shop account. I realized while doing this that I still "own" 400 points. The least expensive purchases in the Wiiware store are 500 points so I couldn't use those points no matter what without forking over some more cash. Is there a real life equivalent where a company can take my money, convert it into some fantasy credits system and refuse to pay out the excess once I close the account? I know there are some store-credit policies for returns in place with some retailers but I don't see the legal basis for holding a customers money hostage even if it's just a couple of dollars. Especially in a non-physical scenario. I can understand that a retailer doesn't want to hand out cash for failed purchases but in the online world all I'm doing is to convert virtual legal tender into some makebelief play money with which to buy goods. How am I not allowed to revert this transaction? If I have a bank account with an amount non-withdrawable from an ATM (in Germany we don't have single notes) I can always walk into the bank and demand the change upon closing the account. Why is it that video game companies are allowed to keep money that I paid them for services they never intend to fulfill? If I have store credit with a company I can always ask them to give me back my money if I paid for it with my real money. Is this a loop hole or are we just to stupid/convenient to call them out on their bullshit?
The fantasy of having your own currency (points) is alluring to people, in thought, but the reality is less fun. With so many monetaries for each network, don't you get confused between their value systems?
I hate it when companies try to be clever by making something complicated.
Leaving money on the table or in your Xbox Live account makes most of us a bit uncomfortable (PDF) because it feels wasteful.
This is why you buy points in bundles of 1000, but games are in multiples of 600. It's also why sausages are sold in packs of 8 and finger rolls in packs of 12. People like symmetry and find things which are unequal disconcerting. It's basic retail psychology.
I'm not in any way involved in this kind of thing, but it's so obvious it barely requires mentioning.
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Could another effect be lowering of their transaction fees? You're no longer paying $0.99, you're now paying $9.99 or so. Plus, this allows easier sale of prepaid cards, doesn't it?
So, they're not ONLY trying to affect your mind, they're also making it cheaper and/or easier for themselves to take your money.
What have Apple got to do with this?
All their iTMS and App Store purchases are done with actual money.
Or were you just lumping them in for good measure, just because?
1. People spend more when using credit/buying credit in blocks/using anything other than one-time transactions
2. Once you buy a certain amount, you can't get it back, so it makes you spend more than the advertised price for whatever you buy.
3. Most people would rather buy another block of points than let the small amount of leftover points go to waste, which starts the revenue loop again.
The thing is, it benefits us as gamers. Undoubtedbly the games companies are also enjoying the benefit of funds sitting with them, but if you made it illegal, the cost of the smallest transactions would go up because of the credit card charges involved. Overall both the gamers and the games companies would lose out (I doubt the interest on the circa £10 I have slushing about in points at any time would be sufficient to make up for the extra cost of micro transactions if the system was banned), the ones who would stand to gain the most are the credit card companies.
It's the old 6-buns, 8 sausages trick.
Actually, it's worse than being an unsecured creditor. They at least get to be in the line at all when court comes up.
The TOS probably states that points can be forfeited/confiscated/adjusted/fucked with for any or no reason.
I'll never buy games from MSGFW. It feels wasteful.
It benefits me that I have to buy 1600 points at a time?
Sorry but the MSFT system is DESIGNED to make sure you always have leftovers that cant be spent. you have no way of gifting the points to others and no way to spend them unless you want to just waste them on moron things like a new t-shirt for your poor representation of yourself attached to your account.
Let me do a transaction for that item. calculate out the frigging price and charge that. they can easily do it.
Do not look at laser with remaining good eye.
Leaving money on the table or in your Xbox Live account makes most of us a bit uncomfortable
But having to create such an account would not make us feel uncomfortable then? Having to pay up over the internet to play a game would not make us uncomfortable either? So since when does that matter?
Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
On Steam, you CAN pay in real money. There is a minimum of $5 for Steam Wallet additions and the TF2/Portal 2 stores require Steam Wallet and won't let you purchase directly, but all GAMES on Steam can be purchased for the exact cost without having to deal with virtual currency.
Plus my own usage pattern is to put $5 into my wallet and buy 2 keys for TF2, so I'm left with $0.02. That doesn't make me uncomfortable.
In addition if I buy a game all the money in my Steam Wallet goes toward the purchase BEFORE it resorts to prompting for a credit card number. So whenever I buy a game it routinely cleans out my Steam Wallet anyway (whether I have $2.51 or $0.02) since I don't keep more than $5 in there at any one time (except when those Japan charity hats were available).
Of course the Wii Store is another deal altogether, I think I still have points on there. Of course that doesn't seem to make me uncomfortable either, I consider it wasted money (as if I lit it on fire and threw it away) until I find something worth spending it on.
It's interesting to me that Impulse started out this way (Stardock Central / TotalGaming.net) & then switched back to real money.
There is a war going on for your mind.
Sony actually doesn't have a similar system. There are two differences:
1. If your purchase is over $5, you can opt to be charged exactly the amount of your purchase.
2. I see prices in my local currency.
Back in the day when I thought Sony were trying to be the good guys with the PS3 (allowed linux without a fight, let us plug in regular USB peripherals, supported SD and CF cards, supported user-upgradeable hard disks) this was one of the things that made me glad I had bought one.
Seems things have changed a lot in 4 years, but they don't make it difficult to get to a zero balance in my PSN account (when I can access it at all ;) ).
Just another proletarian malcontent.
Gift cards are the same game. It's an older game than we know I'm sure. (Tickets at a carnival come to mind as an even older example.) Once money is turned into "not money" there is also a certain disconnect that enables people to spend it more easily in addition to people not wanting to waste the leftovers. (I always give away my left over tickets when leaving a carnival...)
That game no longer works on me. The reality is that the money is already spent -- you don't get it back. I think this is a better mentality to follow as it disables this "uncomfortable" feeling of waste and things left over. The first thing a person must accept is that when you lend someone money, never expect to see it again and at the same time, not be bitter about it. You gave money. It's gone. Once you get past that obstacle of selfishness, the rest is easy.
Learning self discipline and control is difficult. Our parents were supposed to teach us those things but over the past generations, those ideals were forgotten along with the lessons learned from the great depression. (You know, ideas like being is debt is a sin and on and on...) My mother hadn't quite forgotten what her mother taught her and shared a bit of that with me. I still had to learn a lot on my own but not so much as everyone else it seems. The lemmings out there are just eating whatever is being fed to them aren't they...
I think there is a part of the psychology that the creators didn't spot: To me, it feels like i'm spending my money two times. First time when i'm exchanging my real-world money for points. And the second time when i'm spending my points on a game.
What?
This post just got me to check my Games for windows live account. I've had 400 points sitting around for a while. And guess what I forgot about it... Wait... I have credits on my WII account too. And both of these accounts have just barely too little to actually buy anything and I have to buy a set number of points, not the amount remaining for a particular item. There's no good reason why they can't just hook up with paypal or something like that...
10 million users with £10 left over means £100.000.000 sloshing around - and remember, they aren't getting the 0.001% interest on their money, they are probably investing that at an 10%+ roi. That is a lot of money.
The OTHER reason Microsoft does this is that it wants something to cost the same amount everywhere in the world.
So something that costs 400 points in the US will also cost 400 points in Canada, 400 points in Europe, 400 points in Australia and so on with the points costing different amounts in each country.
Paying cash 'hurts'. Paying by credit card hardly hits on the psychological level. Companies know this, you'll buy more when using a credit card. A study http://www.associatedcontent.com/article/142336/do_we_really_spend_more_with_credit.html showed that McDonalds, for example, people spent 12-18% more when paying by credit as opposed to cash. It gets even worse with cell phone transactions where you just 'wave' your phone.
Now you have these points where they don't want you to even think of it as cash. This is really a horrible idea to infuse on the minds of young people, and by young people I mean those in high school / college that don't really understand what all this means.
I know I lasted with Live about a year..the thing that pissed me off the most was having to buy either 400-800 or 1600 point cards...when the cheapest thing actually worth money was 500 and most games were 1200 so no matter what you either had too few or too many points. I understand why they do it, but I found it particularly annoying and know I cant be alone in that. To me is seemed rather shady and dishonest making me much more conscious about spending money with them.
...but when I buy things from Steam I get the option to buy chunks of £25 or the option to put in the exact amount of money for the current transaction; there's nothing forcing me to put in any more money than I need to like the summary and TFA appear to imply.
Never used the MS or Sony game store things, but I've got a veto on buying anything on a "gift card" basis anyway.
Moderation Total: -1 Troll, +3 Goat
If it was only about avoiding credit card transaction fees, they could have made the point purchases in multiples of game prices.
E.g, a game costs 600 points, and you recharge with 1200 points at a time.
What have Apple got to do with this?
All their iTMS and App Store purchases are done with actual money.
Or were you just lumping them in for good measure, just because?
Never heard of itunes gift cards huh? BULLSHIT, ALL OF IT.
These posts express my own personal views, not those of my employer
Geez people, this isn't new.
Congratulations, you just "figured out" the psychology behind carnival ride tickets.
It's not like it's something every scary, toothless carny has understood for 60+ years.
-Styopa
iTunes gift cards are bought with money, and are exchanged for an identical amount of money and are *totally optional*, and a common feature among almost all large retailers.
You can use the entirety of the iTunes store and App Store without ever using an iTunes gift card. Just like you can shop in any major retailer without ever buying one of their gift cards and using it for your purchase.
Your attempts to just sling mud at Apple for no good reason because of an optional gift card system that works entirely in the currency of the country you're in (ie, you by a £15 gift card [or receive one as a gift] and you redeem it for £15, that stays in those units on the store), as part of a discussion about a story involving the obfuscation of real money behind virtual currency systems like "points" is just laughably thin.
The phrase is "grasping at straws".
Steam Wallet is different. You can load it with variable amounts of money while the competitors only accept some values like â5, â10, â20 and so on. So you rarelly end up with money left on the steam wallet.
Also the wallet has another benefit: You can fill it BEFORE buying. Too often I couldn't buy a steam deal because my credit card wasn't accepted for some hours or because I tried to pay british pounds from a euro country and got blocked...
"Life is short and in most cases it ends with death." Sir Sinclair
... Thank you, Captain Obvious
having to sign up for online accounts so you can "register" the game before playing it, bullshit. having to convert currency into proprietary nonrefundable "points" to lock someone in, bullshit. the game distribution/investment industry makes billions of dollars a year. they do not need to squeeze every last penny out of every last customer to profit. fuck them. they are complete and total piles of shit. needless to say, i USED to buy games. the only time i'll put a game cd/dvd into my computer is if someone has and idea on how to crack it. it goes on the machine, gets cracked, uploaded, and removed. that being said, i HAVE been known to buy copies of games that have been released to the foss community as a thank you. maybe they will learn. sony, stream, microcrap, @tari, will never see a dime from my wallet.
Having to work for a living is the root of all evil.
What have Valve (mentioned in the summary) got to do with this?
All their Steam purchases are done with actual money.
Except that there's a $5/4 euro minimum when adding money to a Steam Wallet. Strangely, you can buy individual games for less than that with a credit card...
Also, what is it that I need to do to keep /. from changing my Euro symbol to â?
GLaDOS for President 2016! "Well here we are again. It's always such a pleasure." -- GLaDOS, 2011
Disclaimer: I work in a related industry. When I first came on, I asked the question of why we deal with virtual "points" rather than currency directly. Almost everyone agreed that they'd rather bypass the hassle and deal straight with dollars, and convert incoming currency. Unfortunately, doing so would subject us to much stricter, more invasive, and more costly banking and credit card processing regulations. By selling valueless "points" instead of currency, we're simply trading goods like any other merchant.
No comment.
I'm more concerned about "rounding error", at least for the USD market.
Most people probably use a rough "point = penny" heuristic in their head and call a, say, 1000 point game "about ten bucks". In reality it's about 12.50 though, so they consistently underestimate the cost of everything by about 20%...
it's to videogames what the "and 9/10 of a cent" is to gas... maybe a little more weasle-ish than that.
SO YOU'RE GOING TO DIE: The Comic for Dealing with Death
For certain corner cases, transaction fees are prohibitively high. And for those, a system like Skype's is much more honest.
You pre-pay in whatever currency you wish at first. All prices are shown in your local/current currency. If you wish to change currency, you must spend all the money you currently have (they could add a transfer option too, I guess).
Always in money, always in your preferred currency.
If I but $20 worth of points and purchase $20 worth of content, how am I "getting bamboozled"? This just sounds like people looking for a reason to complain.
Not to mention that you can often find sales on cards so that you can get $20 worth of content for the price of a $15 card.
The reason that companies do this isn't to take advantage of some sort of psychological compulsive need to use up points. It is so that when they sell a game in 15 differing countries with 15 differing currencies their pricing doesn't look like some sort of nightmarish stock exchange. The point cost for a title is fixed across all countries and currencies, and the cost of buying cards or points can be floated against the current exchange rate.
I'm sure that some people will compulsively try to maximize their point spending, but that wasn't the reason why they created the system they way they did.
HA! I just wasted some of your bandwidth with a frivolous sig!
This is utter crap. I am less likely to believe that people think leaving $12 or some other amount of money is wasteful, considering you have people shelling out possibly hundreds a month in other games for virtual goods that will never really have real world value, and if the game ever goes tits up, you are just assed out. That's not even diving into the Gift Card area, where it's common to have a dollar or two left on a card due to not being able to purchase anything with it.
I am Bennett Haselton! I am Bennett Haselton!
That's crap. I have a dead account on Paypal that had a few bucks in and I have never had anyone looking for me to return it. So you know it has been unused at least 8 years.
I am Bennett Haselton! I am Bennett Haselton!
I'll see your Microsoft Points, and raise you my war chest of Confederate dollars. Given entirely imaginable conditions, they're fungible.
There is a reason we established a unit of currency valid "for all debts public and private." Our "Legal Tender" used to be redeemable for gold, but never mind. Making people convert universal US$ into Disney Dollars, or Target gift cards, or Wii Points just fragments trade, and clogs commerce. Right now, it's just for hobby games, but if it spreads to more vital areas of the economy, it doesn't bode well. People suddenly start engaging in arbitrage, as we saw in the gift card markets, and then valuation becomes volatile. Money's greatest advantage, beyond its being legal tender, is that it is generally not volatile. When it is, it is seen as a fiscal management failure.
Or, for another example, just ask anyone who's on Food Stamps, when what they needed was bus fare to get to their job interview.
--
Toro
... to give your credit card details out to passing strangers. Problem solved.
"... and more and more now there are all kinds of electronic goodies available" -- Pink Floyd 1972