In order to become a more attractive platform for publishers, Microsoft is dropping its sales cut on PC games from 30% to 12% later in 2021.
In a bid to better compete with Valve’s Steam and the Epic Games Store in PC game sales, the Microsoft Store will drop its cut of PC game revenue from 30% to just 12%. The change is due to take effect August 1, an unusual date in that it’s both several months from now and in the middle of the Xbox owner’s September fiscal quarter.
The Microsoft Store is often considered a minor player among PC game storefronts, despite Microsoft’s renown and it being baked into Windows 10. Steam remains the most popular with gamers and – by extension – publishers, in part because of features like Remote Play, Steam Link, and SteamVR. The Epic Games Store has made inroads, but mostly because of its aggressive marketing strategy of exclusives and weekly free games. The Microsoft Store does have its own perks, though, such as Xbox Game Pass for PC.
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The reduced sales cut, revealed in a Microsoft blog post, will put the company on par with the Epic Games Store’s generous 88% publisher cut, which currently sits at a flat 70%. Steam takes as much as 30% of revenue, lowering this to 25% after $10 million in sales and 20% after the $50 million, meaning both Microsoft also now undercuts this less lucrative offer. Indie developers have complained that the scheme favors bigger studios, who are often the least in need of more revenue. Steam is still more generous than the Apple App Store or Google Play, which claim 30% in the vast majority of circumstances. Apple also refuses to allow outside payment systems, which is the basis of Epic’s Fortnite-related lawsuit.
The Microsoft Store move could force Valve’s hand to lower its much higher cut. While it’s currently impossible for developers to ignore Steam’s greater market share, the company risks losing that control if it has not just one viable competitor, but two. Steam is also missing an equivalent of Xbox Game Pass, which can make PC gaming far cheaper. Full games on Steam typically cost between $20 and $60 each, but Xbox Game Pass for PC is $10 per month and includes a growing library of games, like Control, The Outer Worlds, and Halo: The Master Chief Collection.
The August 1 switchover will, if nothing else, allow the Microsoft Store to keep a 30% cut during the summer doldrums, while giving publishers the chance to make a decision (or be persuaded) ahead of the Holiday 2021 shopping season. It should also come shortly before the fall cross-platform launch of Halo Infinite, but that won’t be affected by any revenue splits as a first-party game. Hypothetically, Microsoft could want to avoid Halo Infinite being crowded out by an influx of third-party titles, but there’s still a risk of the troubled game getting delayed into 2022.
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