Microsoft turns to blockchain to track royalty payments

Microsoft is hoping blockchain will make it easier to keep track of who is owed royalties for their contribution to games.

The software vendor teamed up with EY to create the solution, which is built on the Quorum blockchain protocol and “Microsoft's Azure cloud infrastructure and blockchain technologies”.

Quorum itself is an enterprise-focused modification of the core software behind Ethereum. It is being led by JP Morgan.

Microsoft said in a statement that a large number of creatives contributed to the development of a new game, and were typically then owed royalties for their work.

These could “include authors, songwriters, production houses, developers and more – the intellectual property generates millions of transactions aggregating to billions of dollars per month in royalties to be paid.”

However, the company said that currently these royalty calculations are “mostly manual and generally managed via offline data sources.”

It hopes that using blockchain with its games publishers will “significantly reduce operational inefficiencies in the rights and royalties management process, and eliminate the need for costly manual reconciliation and partner reviews.”

“The embedded smart contract architecture is designed to enable accurate and real-time calculation of each participant's royalty position, providing enhanced visibility for recording and reconciling of royalty transactions,” Microsoft and EY said.

Games publishers would also benefit by being able to more accurately forecast how much they would have to pay out in royalties in the future.

Microsoft said it intends to deploy the “rights and royalties blockchain network with interested gaming partners in a phased manner.”

“When fully operational, this blockchain network is expected to encompass thousands of Microsoft royalty partners and process millions of transactions per day, making it one of the world's largest enterprise blockchain ecosystems,” the company said.

Both EY and Microsoft said they will explore other uses for the technology outside of Microsoft’s game publisher partners.