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."

Comments

Not to mention

[Hermanas]

The extra money lying around in their bank accounts, while not spent by the customer, could earn them millions in interest.

Re:Not to mention

[tlhIngan]

I buy points cards and prepaid cards for one simple reason - they go on SALE.

When I can get a "free" 25% discount by buying a $20 points card for $15, it's a net win to me. Ditto Xbox Live Gold membership - regular price $60, discounted price $50 without looking too hard. Hell, Microsoft even runs Live Gold specials from time to time. But Dell, Amazon, etc., they often have tons of sales on the stuff.

Also, I don't see leftovers being a huge win for Microsoft in the end - firstly, getting stuck with over 100 points will be hard since there's enough crap to easily put you under it, and if you have 400 points or so, that's enough for many XBLA games, especially those on sale. And since they don't expire, big whoop.

And for the more expensive things like movie rentals and 360 games (yes, you can buy Xbox360 games through Xbox Live - though they typically take a few months after release), you can choose to pay either by points or the real dollar amount. For me, it's points since those are on sale often enough.

Err, hello America, rest of the world here

[Anonymous Coward]

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.

Re:Err, hello America, rest of the world here

[Xest]

Yes, we've been through this whole Microsoft points thing here previously about 10 times, and as I pointed out then the cost of Microsoft points means purchases made in currencies such as the British pound are, depending on exchange rates, sometimes even better than the US pricing, but generally fairly close.

This is far better than online stores that use real money and charge the same numeric value in pounds as they do dollars which can be a 60% or more hike in price for those of us in the UK.

Whatever you think of Microsoft, and whatever conspiracy theory people have for Microsoft points, what can't be denied is that Microsoft points have generally offered much closer parity in global pricing than real currency purchase options have for online transactions from the likes of Steam, and iTunes et al. When Steam removed the option to buy games in US dollars for people here in the UK for example, it amounted to a massive price hike, to the point of in some cases even doubling the price of things.

Personally I'll vote with my wallet, and sure if Microsoft points become a rip off I wont bother with them, but until then they're still a far better deal than most other offerings out there.

Re:Err, hello America, rest of the world here

[Ironhandx]

Stop talking out of your ass.

Large retail chains, or even some larger independant stores, will get those sorts of fees. I've personally negotiated a 2% flat fee with our processor because we do millions in CC transactions every year.

Now, thats here, in North America. Its fairly normal across the continent, excepting a few places.

Those places often get nailed with flat fees of $1.50+ per transaction, plus 3-5%. I can easily imagine it being much higher in China as the worst place I've personally seen here they get nailed for $3 per transaction plus 3%, which is what the GP said.

Your post makes the thread title even more appropriate.

I hate any system where you can buy "points"

[Chrisq]

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).

I disagree.

[Tei]

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.

Re:I disagree.

[Hognoxious]

What you're describing is basically a prepayment system. Replace avatar with phone call and you have a situation that's been in use for years. Yet the phone companies, retarded though they are, seem to able to cope without resorting to points or similar silliness; they just account for your credit in units of cash.

Re:I disagree.

[Racemaniac]

The main problem is that they only let you buy points in certain quantities, and then make sure that you always end up with leftovers

If something costs 190 points, you can bet on it that you won't be able to buy exactly 190 points, you'll always have some leftovers.

I think people wouldn't mind the system if you could just buy the exact number of points they want to make their purchases, but you'll never be able to.

It's a small detail that the summary left out, that makes the system work, and that it annoys people :).

They are over thinking this

[pinkushun]

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.

Re:Why is this even legal?

[js_sebastian]

It obviously vary by country, but I think prepaid phone systems have that policy of not wanting to return your cash. If you dump your money, they are gone.

In Italy the cell-phone companies have been forced to treat money in your prepaid account as real money a few years ago. This means that:

a) they cannot charge you extra money for recharging your account. If you pay 30 euros to get 25 euros credit, that means you end up paying your minutes more than the advertised rates. Not allowed.

b) they have to give you any leftover money back when they close the account.

c) they cannot in practice do promotions where you get free credit with restrictive conditions (as in "Get 100 euros* of credit with your new account". *only valid for calls done on february 29th and lasting between 13 and 14 minutes). Of course, they can and do use some kind of point system for that as well, but they're not allowed to mislead you by calling it money anymore.

Doesn't make me uncomfortable.

[The MAZZTer]

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.

For once, not Sony

[dr.newton]

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 ;) ).

Taking advantage of the undisciplined minds

[erroneus]

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...

The OTHER reason Microsoft does this...

[jonwil]

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.