Microsoft launches pilot rewards program for Xbox gamers

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Microsoft has started rolling out a pilot "Rewards Program" to select Xbox 360 owners. Users who get into it earn Xbox Points (used as currency in the Xbox Marketplace) for signing up/renewing services, buying games and so on. A classic "The more you spend, the more you save!" system. I can just see the late night TV ad for this.

A few examples: If you purchase a one year renewal to the service (list price $49.99), you'll get 200 points ($2.50). Make your first purchase on the Xbox Marketplace and you'll earn 100 points. Take a survey and earn 100 points. Existing members can earn "Up to 5%" points-back on Marketplace purchases, with the amount starting at 1% and going up 1%/month until it maxes at 5%.

According to Gaming Target, the program will have three tiers, with the lowest tier only having the 5% rebate and the survey rewards, a middle tier having everything but the 5%, and then the highest tier offering all rewards. This sounds confusing enough that I have to assume these tiers are just in place for the duration of the pilot program in order to determine which package resonates best with users.

The pilot program will run for six months. Microsoft hasn't said anything about what comes next; presumably they'll use data from the pilot to decide if this is something they want to deploy more widely. A tiered system implies some kind of annual fee, but I still think those tiers are just for testing purposes.

I'd love to know why Microsoft thinks the time might be right for a Rewards Program. When a credit card company offers you this kind of program it's generally to get you to pick their card over a competitors. Is Microsoft feeling heat from the Playstation Network or the Wii's digital content? That's hard to imagine. The PS3 doesn't have the install base to be a threat and the Wii doesn't have the storage space to really encourage a lot of spending on digital titles. The six month duration puts the end of the pilot program right around E3 2010. Perhaps Microsoft will reveal their plans then.

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