Update []:
Some Xbox fans in the US have informed us they already have access to this feature! It's definitely being advertised as "coming soon" by Xbox though, so perhaps it's being tested with a subset of users before rolling out to more people.
Original Story: At the moment, if you want to buy a game with your Microsoft / Xbox Rewards points on console, you have to go to the Rewards dashboard and redeem an Xbox or Microsoft Gift Card in order to add funds to your account.
That option isn't going away, but Xbox Rewards points will soon become an actual currency on the Xbox / Microsoft Store, meaning you can buy a game directly with your points without having to redeem anything else separately.
This is being advertised on the US version of the official Xbox website as a feature that's "coming soon":
"COMING SOON - Spend points directly on your Xbox console
Spending your points has never been easier. On your console, simply choose something you want from the Store and use your points at checkout."
Looking at the small print, Microsoft says that the feature will only work for single-item purchases at first, and it won't apply to subscriptions like Xbox Game Pass. It should apply to any game or DLC, but seemingly not to bundles.
There's no word at the moment on when this will begin rolling out and whether anyone outside the United States will get it or not, but we assume if it ends up going well in one market, they'll push it out to other regions too.
If you're wondering, this doesn't seem to have any direct connection to the other Microsoft Rewards news that was announced recently, in which it was revealed that various countries will be getting major changes involving new tiers and ways to earn points. This is just a separate feature that's meant as a quality-of-life improvement for console owners, and it's certainly something we're pleased to see!