In a previous post I was wondering why microsoft had opted to use a point system completely independent of the currency that is prevalent in the governing country, which in the US would be the almighty dollar. I found this interesting explanation by Ben Barker as to why this sub currency might be useful
Why Do I Want to Use Points?
... the big deal here is that Points allow what technical types call "micro-transactions."
On the original Xbox Live, transactions had to be around five dollars U.S., the minimum for most credit cards. But with Microsoft Points, the price for most anything—maps, skins, levels, demos, and more—can be much lower than that. That's a big deal. For example, say you want to get one of the new maps for your favorite shooter, but you're not that interested in a few of the others. Lucky for you, Marketplace can offer each map individually for just a few points. Now that's savings.
In the future, you might even be able to redeem your Points for real-world objects, like hardware accessories for your Xbox 360 (note that this is speculative—at first, Marketplace will deal in downloads only).
What About User-to-User Transactions?
Though you won't be able to do it for a while yet, Microsoft eventually wants to enable Xbox Live users to buy and sell user-created content, which could prove to be the heart of the "micro-transaction" system. So, hypothetically speaking, I could create a new skin for Project Gotham Racing® 3 and use that skin when I win a tournament viewed by hundreds of gamers in spectator mode.
Big champion that I am, everyone who sees my skin when I'm racing wants it. I can then (again, hypothetically) post it up for sale in the Marketplace at, say, a dime's worth of points. Other users can get the skin for the price of a piece of candy, and I earn more points in exchange.
In hindsight I may have been prematurely critical of the points concept, I think the promise of user to user transactions is really cool, and I guess micro transactions would not be the cost effective with Visa or Master Card. I just hope this does not become a one way street. Will I be able to gain points and translate them back into real money?
PS the line up of movies and TV shows available from the Live Market Place is getting very impressive, I am hoping that the Zune gets access to this media too!