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theprof00 on 10 July 2013
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Adinnieken said:
theprof00 said:
Adinnieken said:
SvennoJ said:
Eurogamer also reports 800 msp games going from 6.80 to 8.99, that's a 32% price hike.
And doesn't not having to produce and distribute live cards more then offset the 3% credit card charge?

Exchange rate reason is bullshit too. The Canadian dollar has been on par with the US dollar for years, even been worth more then the US dollar, while MS points have always stayed 20% more expensive over here.
It's $7.25 here for 500 points, already more expensive then psn equivalents. That would be 7.37 pounds for an 800 points game by todays exchange rate.
Anyway I would be happy if XBLA prices in Canada get on par with PSN, 14.99 for a 1200 point game instead of 17.40

There is always an exchange rate penalty.  Do you think banks on any level just provide services for free?  NO.  There is a fee for every financial transaction that involves an exchange of foreign currency.  Microsoft is a US company.  Regardless of whether it does business in the UK or Canada, the company has to at some point perform an exchange of currency, for which it incurs a fee.

This is one of the reasons why US companies refuse to do business with consumers outside of the US.  Not to mention the shipping expense, as well as import fees.  Nevertheless, once you get over those two shockers, the retailer then finds out the bank took a cut.

Don't believe me?  Take your ATM card, go across the border, and use it in the US to withdraw US funds.  The first hit you'll take is likely a $3.00 ATM fee, which is expected, but then next up will be a currency exchange fee. 

Explain how the transactions are different now, instead of using vague overarcing scenarios.

Previously, to my understanding, what a customer would do, is go to xboxlive or go to game store and buy a card using a credit card or cash.
For the xboxlive direct point purchase, MS pays a CC fee. For the store, MS sold to a distributor, and then that distributor sold them to the store, and then the store pays a CC transaction fee when someone comes in and buys the card with a CC.

What has changed in terms of costs to MS?
It cost more to buy an ms points card in UK than it did in the US, because of the currency. What's so different now?

If you bought your Microsoft Points through Microsoft, you paid face value.  It was NEVER a good idea to buy your Microsoft Points from Microsoft, same with the Xbox Live subscriptions.  Retail cards are sold MSRP, that is they're sold with margin.  Microsoft and Nintendo both did this.  Sony did not, Sony's cards are face value cards.  As I described elsewhere, a 1600 MP card may cost you $20, but it cost the retailer $15.00.  That margin, gives the retailer the ability to take a profit, incur some expenses, and even put the cards on sale. 

Anyway, when you go onto Xbox LIVE and purchase that content you're purchasing that content from an American company.  Microsoft, in order to accept that purchase in local funds (GBP), has to perform a currency exchange.  Or more correctly the bank who is performing the transaction does.  With Microsoft Points, the same issue existed if you purchased your points from Microsoft, but if you went retail (which was actually the more popular method of obtaining points) there was, as stated above , margin for the retailer to absorb any fees.  Which for them the currency exchange would not be one of, since they're a UK business doing business in the UK.

With Microsoft Points, VAT was included in the price of the Microsoft Point cards.  Now with real-world currency, prices need to reflect VAT as well.  This means that any content has to reflect a 20% VAT if the price of the goods wasn't previously aligned (because I'm sure there's margin in XBL goods too).  In the US, this means each and every State will be different.  Where as previously, I didn't pay taxes on goods because in my state MP cards are exempt from taxes, I will be charged sales tax for the Xbox LIVE purchase because Microsoft does business in my State and by law because they do they have to charge sales tax for online purchases.  For some states, this won't have an impact, they either already pay or they have laws against online sales taxes.  But for the vast majority of people across the US this is gonna bite.  You won't see it in the XBL price, an item will be price the same regardless of where you live, but when you go to check out, the price will reflect any sales tax.

Microsoft Points were, in every way, better.  Only stupid people thought they were worse or a scam.

And when you bought a card with points, it also reflected tax. This doesn't make any sense. There's no difference whatsoever.

Also, points cards had added VAT tax, hence why the prices were higher. You'll still be paying the same thing.

That margin will still exist! Just because it has a dollar value doesn't mean there's no margin.