Microsoft has announced that they will be phasing out their virtual currency system, known as Microsoft Points, by the end of 2012. The system will be replaced by real-life currency on Xbox Live, Zune Marketplace and Windows Phone.
The current system utilizes both real-life currency and a virtual currency known as Microsoft Points that users can trade their real-life currency for on Xbox Live, Windows Phone and Zune Marketplace. Microsoft Points can currently be spent on anything ranging from On Demand games to songs in the Zune Marketplace. As of the end of 2012, however, Microsoft plans to phase out that system entirely in favor of a straight real-life currency system.
Most virtual stores use a real-life currency with regional pricing versus a virtual currency or points-system model, including the PlayStation Network store and Apple's App Store for iOS. This move will put Microsoft on that same playing field. One of the primary complaints on Microsoft Points is that they are only sold in bundles, so you often end up having to buy more MSP than you actually want to spend.
The new system is set to be in place by the end of the year, so stay tuned for more information!