Microsoft uses blockchain to deliver royalty statements to Xbox game publishers faster with significant efforts reduction
Xbox—the Microsoft video game platform—offers game content from publishers around the world. To calculate royalties for Xbox publishers, Microsoft used a manual method that relied on spreadsheets, and the process typically took 45 days. To compress that time and better serve publishers, Microsoft developed a blockchain-based solution that offers royalty information in near real time. The calculation process is now more transparent, instills greater trust, provides publishers with actionable business insights, and reduces process efforts by two-thirds.
Video games are big business. Big business means big money. And keeping up with royalty payments among game platform owners, publishers, and distributors is cumbersome and complicated—or at least it used to be. "Microsoft and the game publishers in the Xbox business share the problem of reconciling and recalculating royalty payments," explains Rohit Amberker, Finance Director for Royalties and Content Operations at Microsoft. "The offline royalty payment solution that stakeholders have used for years is based on printed documents and spreadsheets. It's expensive to manage." He further notes that many of the stakeholders don't understand how the royalties are calculated.
A chain with strong links
Now, Amberker and the team he works with are taking advantage of blockchain technology to bring open, efficient confidence to the Xbox royalty payment process. The solution runs on Microsoft Azure.
Perhaps best known as the foundational technology behind Bitcoin, blockchain is a digital ledger of transactions that is distributed across peer-to-peer networks. It can cryptographically prove that the data on the ledger was put there at the right time by the right party. "The need for a blockchain solution like ours is not unique to Microsoft and game publishers," says Brent Truell, Principal Program Manager on the Azure Blockchain Engineering Team at Microsoft. "It applies to any industry where organizations have to reconcile royalty payments." (For more about blockchain, go to blockchain on Azure.)
Tim Stuart, Chief Financial Officer of Xbox, notes that the security and accuracy of blockchain drive greater trust among multiple parties: "We are developing an ecosystem within the gaming industry that connects developers and publishers to game performance. Providing near real-time access to data greatly improves the process' effectiveness and insights that lead to a more enriching experience for the partners."
The need to know and the need for speed
Historically, information about royalties (and the sales that generate them) would become available about 45 days after each month ended—the first time that recipients could see a statement and learn how much they earned from game sales. For example, says Amberker, "A game publisher might predict that weekly sales of a new game will be $25 million. After 10 days, the publisher can account for $10 million. Was the forecast wrong? Should the publisher spend more on advertising? Should it cut its losses and run? The publisher won't know for sure for weeks."
However, because blockchain operates on a continuously running distributed network, the Microsoft blockchain solution offers the power of actionable information in real time. It's automated, which means no more manually examining PDF files and spreadsheets. And for transparency, its ledger exposes underlying data that can be inspected and verified with a high degree of security. Stakeholders can see how a contract is set up, how it's calculated, and how the statements are generated. "Given that the data and related services are already running on Azure, enabling blockchain was simple—just replace paper contracts with digital smart contracts for transaction processing," says Jagannathan Venkatesan, Principal Software Engineering Lead on the blockchain project at Microsoft.
Microsoft also uses the solution to save costs. Continues Amberker, "After adopting the blockchain solution, even with only one-third efforts, we're able to run the same royalty operations while providing faster, more reliable service."
Continuing the themes of cost and security, Grace Lao, General Manager of Global Finance Operations at Microsoft adds, "As the capital investments are being squeezed, blockchain provides a reliable and efficient option that distributes the costs and improves security."
Transparency and trust
Stakeholders have greater trust in the royalty payment process now that they use the more transparent blockchain solution. "We've always had checks and balances in place," says Lao. "But now, the information is available without wasting time on audits. Instead, they can focus on making more-profitable deals for everyone."
Lao notes that the solution relies on a lot of transactional data that has until now been underutilized. "The data tells a business story about which games sold, which piece of intellectual property is the hottest," she says. "That's important knowledge. With the blockchain solution, we can surface information that tells us and our publisher-partners how to make better-informed decisions about structuring business relationships."
Furthermore, Microsoft is codeveloping this blockchain solution along with Ernst & Young LLP, which brings that company's experience to the business side of development. "Blockchain is inevitable, not a trend. Executives need to start thinking about its implications to their organization as the underlying technology of distributed shared ledger," says Deep Ghumman, Partner and Principal of Advisory Services at Ernst & Young. "It is maturing at a rapid pace. Policies, governance, and regulatory guidelines are being developed so that companies that are ready to embrace this change will be successful in the long run."
Strong security, anywhere
The distributed design of blockchain means that organizations can deploy a blockchain infrastructure almost anywhere. However, Truell notes that Azure is an ideal host for blockchain because it offers effectively unlimited scalability and vast complementary services. He says, "Azure is where we can start looking at machine learning, Active Directory, and enterprise-ready networking capabilities. That's where the Azure story gets really exciting."
"We are always looking at ways to use emerging technologies in all facets of our business," adds Loic Amans, Senior Vice President for Finance and Strategic Planning at video game publisher Ubisoft. "The opportunity to collaborate with Microsoft on blockchain use cases, especially in the domain of digital contracts and royalties, is thrilling."
Taking all of these benefits into account, Amberker concludes, "For the first time, at the transaction level, publishers can analyze the sales performance of a game as it happens. Accounting teams can automate accruals on a daily basis. Finance folks can use timely data along with machine learning capabilities to improve forecasting. Control testing can be performed on an entire population. And with all these, we are just scratching the surface. This solution is a real game-changer."
Source: https://customers.microsoft.com/en-...ancial-operations-professional-services-azure
Xbox—the Microsoft video game platform—offers game content from publishers around the world. To calculate royalties for Xbox publishers, Microsoft used a manual method that relied on spreadsheets, and the process typically took 45 days. To compress that time and better serve publishers, Microsoft developed a blockchain-based solution that offers royalty information in near real time. The calculation process is now more transparent, instills greater trust, provides publishers with actionable business insights, and reduces process efforts by two-thirds.
"After adopting the blockchain solution, even with only one-third efforts, we're able to run the same royalty operations while providing faster, more reliable service."
- Rohit Amberker: Finance Director, Royalties and Content Operations
- Rohit Amberker: Finance Director, Royalties and Content Operations
Video games are big business. Big business means big money. And keeping up with royalty payments among game platform owners, publishers, and distributors is cumbersome and complicated—or at least it used to be. "Microsoft and the game publishers in the Xbox business share the problem of reconciling and recalculating royalty payments," explains Rohit Amberker, Finance Director for Royalties and Content Operations at Microsoft. "The offline royalty payment solution that stakeholders have used for years is based on printed documents and spreadsheets. It's expensive to manage." He further notes that many of the stakeholders don't understand how the royalties are calculated.
A chain with strong links
Now, Amberker and the team he works with are taking advantage of blockchain technology to bring open, efficient confidence to the Xbox royalty payment process. The solution runs on Microsoft Azure.
Perhaps best known as the foundational technology behind Bitcoin, blockchain is a digital ledger of transactions that is distributed across peer-to-peer networks. It can cryptographically prove that the data on the ledger was put there at the right time by the right party. "The need for a blockchain solution like ours is not unique to Microsoft and game publishers," says Brent Truell, Principal Program Manager on the Azure Blockchain Engineering Team at Microsoft. "It applies to any industry where organizations have to reconcile royalty payments." (For more about blockchain, go to blockchain on Azure.)
Tim Stuart, Chief Financial Officer of Xbox, notes that the security and accuracy of blockchain drive greater trust among multiple parties: "We are developing an ecosystem within the gaming industry that connects developers and publishers to game performance. Providing near real-time access to data greatly improves the process' effectiveness and insights that lead to a more enriching experience for the partners."
The need to know and the need for speed
Historically, information about royalties (and the sales that generate them) would become available about 45 days after each month ended—the first time that recipients could see a statement and learn how much they earned from game sales. For example, says Amberker, "A game publisher might predict that weekly sales of a new game will be $25 million. After 10 days, the publisher can account for $10 million. Was the forecast wrong? Should the publisher spend more on advertising? Should it cut its losses and run? The publisher won't know for sure for weeks."
However, because blockchain operates on a continuously running distributed network, the Microsoft blockchain solution offers the power of actionable information in real time. It's automated, which means no more manually examining PDF files and spreadsheets. And for transparency, its ledger exposes underlying data that can be inspected and verified with a high degree of security. Stakeholders can see how a contract is set up, how it's calculated, and how the statements are generated. "Given that the data and related services are already running on Azure, enabling blockchain was simple—just replace paper contracts with digital smart contracts for transaction processing," says Jagannathan Venkatesan, Principal Software Engineering Lead on the blockchain project at Microsoft.
Microsoft also uses the solution to save costs. Continues Amberker, "After adopting the blockchain solution, even with only one-third efforts, we're able to run the same royalty operations while providing faster, more reliable service."
Continuing the themes of cost and security, Grace Lao, General Manager of Global Finance Operations at Microsoft adds, "As the capital investments are being squeezed, blockchain provides a reliable and efficient option that distributes the costs and improves security."
Transparency and trust
Stakeholders have greater trust in the royalty payment process now that they use the more transparent blockchain solution. "We've always had checks and balances in place," says Lao. "But now, the information is available without wasting time on audits. Instead, they can focus on making more-profitable deals for everyone."
Lao notes that the solution relies on a lot of transactional data that has until now been underutilized. "The data tells a business story about which games sold, which piece of intellectual property is the hottest," she says. "That's important knowledge. With the blockchain solution, we can surface information that tells us and our publisher-partners how to make better-informed decisions about structuring business relationships."
Furthermore, Microsoft is codeveloping this blockchain solution along with Ernst & Young LLP, which brings that company's experience to the business side of development. "Blockchain is inevitable, not a trend. Executives need to start thinking about its implications to their organization as the underlying technology of distributed shared ledger," says Deep Ghumman, Partner and Principal of Advisory Services at Ernst & Young. "It is maturing at a rapid pace. Policies, governance, and regulatory guidelines are being developed so that companies that are ready to embrace this change will be successful in the long run."
Strong security, anywhere
The distributed design of blockchain means that organizations can deploy a blockchain infrastructure almost anywhere. However, Truell notes that Azure is an ideal host for blockchain because it offers effectively unlimited scalability and vast complementary services. He says, "Azure is where we can start looking at machine learning, Active Directory, and enterprise-ready networking capabilities. That's where the Azure story gets really exciting."
"We are always looking at ways to use emerging technologies in all facets of our business," adds Loic Amans, Senior Vice President for Finance and Strategic Planning at video game publisher Ubisoft. "The opportunity to collaborate with Microsoft on blockchain use cases, especially in the domain of digital contracts and royalties, is thrilling."
Taking all of these benefits into account, Amberker concludes, "For the first time, at the transaction level, publishers can analyze the sales performance of a game as it happens. Accounting teams can automate accruals on a daily basis. Finance folks can use timely data along with machine learning capabilities to improve forecasting. Control testing can be performed on an entire population. And with all these, we are just scratching the surface. This solution is a real game-changer."
"We've always had checks and balances in place. But now, the information is available without wasting time on audits. Instead, they can focus on making more-profitable deals for everyone."
- Grace Lao: General Manager, Global Finance Operations
- Grace Lao: General Manager, Global Finance Operations
Source: https://customers.microsoft.com/en-...ancial-operations-professional-services-azure
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