Microsoft will not reduce their Xbox Store cut to 12%, despite confidential document leak

Microsoft will not be reducing their for purchases made on the Xbox store to 12%, despite such an intention being revealed in a previously confidential documents. While the company is still reducing its fee to 12% on the Windows 10 store as announced last week, they will be retaining the standard 70:30 split for Xbox purchases.

In response to the reporting on the issue, a Microsoft spokesperson told The Verge on Saturday that “[they] have no plans to change the revenue share for console games at this time,” and then followed up with a more definitive “We will not be updating the revenue split for console publishers.”

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The document was leaked through documents filed in the Epic Games vs. Apple case, as both sides of the argument call witnesses from other companies across the games and tech industry. Many parts of the revealed documents are redacted, but some intriguing elements are revealed. One internal presentation document from around July 2020 suggests that the timed exclusivity period for STALKER 2 is apparently just 3 months, while the ‘Microsoft Store Revenue Share & Exceptions Overview 2021‘ document that Microsoft was planning to make a significant change to their digital storefront policy with an 88:12 split coming in calendar year 2021.

It’s not clear why the change of heart, since January – could the cancellation of Xbox Live Gold price changes in January and the shift on its requirement for free to play games have had an impact? Cutting the fee on microtransactions to 12% would have been offset quite easily if Xbox Live Gold was going to be costing users $120 instead of $60…

Still, such a move would be a massive change for the games industry in general, given the 30% cut on all digital sales taken by Sony, Microsoft and Nintendo. The platform holders all take licensing fees on all games sold for their consoles, but digital sales are much more lucrative as they also get to act as the vendor as well. While all three have significant revenue from their online subscription services PlayStation Plus, Xbox Live Gold and Nintendo Switch Online, a significant portion of their income is still simply through selling games.

However, the 30% business model is under fire right now through anti-trust investigations around the world and Epic Games’ lawsuit against Apple. Epic Games’ own storefront is seeking to upend the PC gaming market in part by undercutting Steam’s standard 30% take from purchases with an 88:12 split. Microsoft is following their lead with a planned overhaul of the Microsoft Store for Windows 10 that shifts from a 70:30 split to 88:12 split, starting on 1st August 2021. However, this move is more an attempt to increase the attractiveness of the storefront for developers, as opposed to trying to ward off anti-trust investigations that Google and Apple face for their Android and iOS stores.

Video games consoles are arguably very different platforms, with a more singular focus on a particular form of entertainment as opposed to a more general purpose computing device, which should help them to avoid the ire of legislators. However, there is some speculation that, should Epic be successful in forcing Apple to adjust their business model to allow the Fortnite developer to process its own payments, they could turn their gaze to the home console market to maximise their profits further…

Source: The Verge

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