Automate Gaming Royalties and Licensing Settlements
Sector: Tertiary sector · Industry: Gaming and esports · Organisation: Microsoft Xbox, EY · Maturity level: Production
Microsoft Xbox and EY transferred complex licensing agreements into smart contracts to automate rights and royalties directly into ERP systems, billing, and payment processing. Access to statement data decreased from up to 45 days to approximately four minutes, while overall processing efficiency improved by 99 percent.
Documentation status
- Project status: Production (as of 01 January 2020) — The system was established by Microsoft Xbox and EY for the productive rights and royalties accounting with game publishers in global operations.
- Evidence: Evidence medium
- Editorial review: pending
Description
The solution developed by Microsoft Xbox and EY fundamentally modernises the accounting of sales shares for digital games. Instead of manually checking transaction data for weeks, smart contracts record every purchase and immediately determine the correct revenue share for the publishers. This creates a reliable data basis for all contractual partners and ends lengthy disputes over late or incorrect payments.
Microsoft Xbox and the consulting firm EY developed a productive rights management system that automates complex licensing contracts based on Enterprise Ethereum. The system processes sales data directly from the Xbox Store, applies the contractually agreed conditions via smart contracts, and feeds the results into existing ERP structures. Before implementation, it often took up to 45 days of manual review time between sales and final royalty reports. Thanks to the blockchain architecture, the consolidated billing information is now available after around four minutes, representing a 99 percent acceleration in data provision. Game publishers thus gain immediate transparency over their revenues and invoice amounts, while Microsoft significantly reduces operational costs in platform operations.
Perspectives
B2B — organisations perspective
The collaboration between platform operators and developer studios is strengthened by auditable, tamper-proof billing data. Payment flows occur significantly faster and disputes over unclear sales figures are largely eliminated.
Employees perspective
Employees in finance departments and partner management spend significantly less time on manual document reconciliation. The focus shifts to supporting publishers and further developing strategic licensing models.
Benefits
General
- 99 percent acceleration of data processing
- Near real-time evaluation of sales and royalty data
- Avoidance of reconciliation errors through immutable smart contracts
B2B — organisations
- Reduction of accounting time from 45 days to four minutes
- Improved liquidity planning for external game publishers
- Audit-proof transparency for financial audits
Employees
- Elimination of manual spreadsheet reconciliations during monthly closings
- Reduced error susceptibility in complex contract variants
Challenges
General
- Labour-intensive digitisation and standardisation of historical licensing contracts
- High integration complexity when connecting existing enterprise ERP systems
B2B — organisations
- Ensuring absolute confidentiality of sensitive revenue data of competing partners
- Need for reconciliation of individual special conditions outside the standard contract
Employees
- Need for training in handling blockchain-based accounting processes
Technology foundation
Enterprise Ethereum / Quorum with smart contracts based on Microsoft Azure Blockchain.
Implementation examples
Xbox Enterprise Blockchain for Rights and Royalties
The manual collection and calculation of royalties for thousands of titles led to payment delays of up to 45 days and high administrative effort.
Microsoft Xbox and EY implemented a blockchain solution to fully automate the processing of licensing contracts and royalty payments with game publishers.
As part of the joint initiative, Microsoft Xbox and EY transferred the licensing and billing processes of the Xbox platform into an enterprise blockchain architecture. The system encodes complex contracts into smart contracts and links sales events directly with ERP, invoicing, and payout systems. This reduced data access for royalty calculations from previously up to 45 days to around four minutes, increasing operational efficiency by 99 percent.
Reduction of royalty data delivery time from up to 45 days to around four minutes and improvement of processing performance by 99 percent according to EY case study.
Elimination of non-transparent calculations, reduction of billing discrepancies, and automated compliance with individual licensing terms.
Tags
Smart Contracts, License Management, Accounting, Enterprise Ethereum, ERP Integration