Microsoft Lowers Share with Game Developers to 12 Percent

Microsoft just slashed the revenue cut it takes from PC games on Windows from 30 percent to 12 percent, effective August 1, in a move to lure more game developers to its platform. Xbox Game Studios head Matt Booty said that, “a clear, no-strings-attached revenue share means developers can bring more games to more players and find greater commercial success from doing so.” The change will not affect Xbox console games. Microsoft’s new revenue split is the same that Epic Games offers to PC game developers.

The Verge reports that Steam, which “continues to dominate mind and market share among developers … still takes a 30 percent cut on sales in its Steam store, which is reduced to 25 percent when sales hit $10 million, and then 20 percent for every sale after $50 million.”

In a recent survey, 3,000 game developers said the Steam cut is unfair. Still, both Microsoft and Epic Games have “struggled to convince game developers to list titles in their stores to compete with Steam.” It notes that one obstacle for Microsoft was “forcing game developers to use UWP [Universal Windows Platform] in the past.” Microsoft now supports Win32 games.”

Microsoft is “reportedly working on an overhaul to its Windows store that could pave the way for developers to be able to submit any Windows application to the store — including browsers like Chrome or Firefox,” and Booty promises “improved install reliability and faster download speeds over the next few months.”

The Verge states that, “Microsoft still needs to significantly improve PC gaming” to achieve the popularity of Steam and Discord, adding that “the world’s biggest PC games are also fighting a huge surge in cheaters and hackers, and Windows doesn’t do enough to help game studios protect their games.”

The New York Times notes that, “Google and Apple have faced antitrust questions for the 30 percent fees they charge developers whose programs appear in their app stores.” Epic Games has sued both companies, “claiming they violated antitrust laws by forcing developers to use their payment systems.” Both platforms kicked Epic Games’ “Fortnite” from their app stores and “have since reduced fees for some developers.”

In a press release, The NPD Group reports that, “overall total consumer spending on video gaming in the U.S. totaled $14.92 billion in the first quarter (Q1) of 2021 (January-March), an increase of 30 percent compared to Q1 2020.”

Content spending saw an increase of 25 percent to $12.8 billion, and “hardware and accessories also experienced double-digit percentage gains for the quarter, increasing 81 percent and 42 percent, respectively.”

“Consumer spending on video game products continued to thrive in the first quarter, delivering record results,” said The NPD Group’s games industry analyst Mat Piscatella. “While we are still seeing elevated rates of both engagement and spending resulting from changes in consumer behavior driven by the pandemic, we are also seeing cyclical gains from the November launches of both the PlayStation 5 and Xbox Series consoles.”