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Drama Clickbait The Verge - Microsoft wants to reduce its Xbox store cut and shake up console gaming (Update: Not Happening, see OP)

Heisenberg007

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“We have no plans to change the revenue share for console games at this time,” says a Microsoft spokesperson in a statement to The Verge about these documents. That suggests these plans have either fallen through, changed significantly from January, or Microsoft isn’t ready to announce any changes yet. Either way, Microsoft has clearly been planning this change, and wants to cut its Xbox fees somehow.

LOL! What the hell is wrong with today's journalists and writers!
 

Beardsalt

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Or People who buys the majority of 3rd Party games on PS4/5 with Sony enjoying Free advertisements from Microsoft exclusive marketing deals / presentations, thanks MS 👍
Or like every Blu-Ray drive sold to MS, Sony is getting their cut because it’s their technology. Thanks MS! 👍
 
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Heisenberg007

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Don't forget apparently Gamepass makes no money 🤭🤣
We have no plans to change the revenue share for console games at this time,” says a Microsoft spokesperson in a statement to The Verge about these documents. That suggests these plans have either fallen through, changed significantly from January, or Microsoft isn’t ready to announce any changes yet. Either way, Microsoft has clearly been planning this change, and wants to cut its Xbox fees somehow.

Does Gamepass really make money? 🤔
 
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MS ain't fucking around. They are giving Sony a showing up.

but yeah Sony apparently thinks their best move is to "stay the course" :messenger_tears_of_joy:
 
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El Pistolero

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Sony's success came from Microsoft's mistakes. But look where we are at now, Microsoft was right and Sony was wrong because the majority need online DRM to work. In a sense, Microsoft was ahead of the time with scams that these devs do now. Sony took the opportunity and ran with it.

The "What year is this?" meme comes to mind...😂
 

Heisenberg007

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Maybe they are smart enough to realize PR statements and the truth are two separate things.
No, what the writer wrote is absolutely stupid. MS said we don't have any plans. The writer said they clearly want to make that change. Want to?! Is he serious? How does the writer know what MS wants to do when they have clearly said they have no plans for that right now?

It's like the writer saying to MS "search your feelings. You know it to be true."
 

Heisenberg007

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MS ain't fucking around. They are giving Sony a showing up.

but yeah Sony apparently thinks their best move is to "stay the course" :messenger_tears_of_joy:
News flash: MS is also staying the course for now.

“We have no plans to change the revenue share for console games at this time,” says a Microsoft spokesperson in a statement to The Verge about these documents. That suggests these plans have either fallen through, changed significantly from January, or Microsoft isn’t ready to announce any changes yet. Either way, Microsoft has clearly been planning this change, and wants to cut its Xbox fees somehow.
 

The Alien

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Interesting move.

Hasn't really moved the needle for the epic store, but we'll see how it works out for xbox.
Well, watever Epic is doing seems to be working.
They opened in December 2018 and have more that 160 million users.
 
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Oct 16, 2017
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Oh for sure it “costs” them cash. But the questions is whether this loss can be viewed as an investment. Losing money to gain users can be a smart mid term strategy if you feel you can keep them. As some one already posted better to make 12% of 100 sales than 30% of 10 sales.

So without us seeing their books, it’s just academic speculation based on public records and perceptions.
It's not an investment. Investment would be buying something. This is straight discounting their services. Basically a pricing war with the intent to force everyone else to do the same. The idea being it doesn't matter if your service sucks, if everyone else had to decrease their own services because the profitability dropped. And then by virtue of having more cash, you can then out-starve everyone until others quit from not being profitable. Basically what you do when you can't offer a better product.

But of course, the issue is that the higher share given to developers is not a flat sum but relate to how many copies of games that are actually sold. So the flaw in that plan is that if people rightly refuse to use a broken store that can't run games, then the developer wouldn't see that extra money. It doesn't matter how cheap you are charging rent of your store front if you don't get customers. Windows Store is a dead Mall trying to lower rent. Doesn't matter if the rent is dirt cheap if there is no foot traffic.
 

b6a6es

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Sony's success came from Microsoft's mistakes. But look where we are at now, Microsoft was right and Sony was wrong because the majority need online DRM to work. In a sense, Microsoft was ahead of the time with scams that these devs do now. Sony took the opportunity and ran with it.
Lol no it didn’t, as PS3 still outsold X360 at the end of the gen (before Xbone PR disaster), imo the main drive for any platform to be successful is to have Critically Acclaimed, Exclusive Content, while having good hardware / services is important, its still nowhere close to the importance of content

and if Content is king, then Exclusivity is Gold , thats why people are currently spending 300$ on a handheld PS3 with decade old ports for 60$, and guess what, it’s sold out everywhere.

the only good thing I’d say about Microsoft, is that they’re slowly moving away from the Dead beaten horse franchises like Halo & Gears into Fresh New IP’s while acquiring great studio’s/Publishers like Obsidian/Bethesda, Im literally more excited about the possibility of a Modern, High quality Morrowind Remake than whatever 343i & coalition shits out
 
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Heisenberg007

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It's not an investment. Investment would be buying something. This is straight discounting their services. Basically a pricing war with the intent to force everyone else to do the same. The idea being it doesn't matter if your service sucks, if everyone else had to decrease their own services because the profitability dropped. And then by virtue of having more cash, you can then out-starve everyone until others quit from not being profitable. Basically what you do when you can't offer a better product.

But of course, the issue is that the higher share given to developers is not a flat sum but relate to how many copies of games that are actually sold. So the flaw in that plan is that if people rightly refuse to use a broken store that can't run games, then the developer wouldn't see that extra money. It doesn't matter how cheap you are charging rent of your store front if you don't get customers. Windows Store is a dead Mall trying to lower rent. Doesn't matter if the rent is dirt cheap if there is no foot traffic.
And this can easily backfire, too, by the way.

For example, what if 70% on PlayStation still turns out to be significantly more than 88% on Xbox for game developers? Considering the recent sales comparison data (Hitman 3, Nier), the split was 81/19 and 74/26 respectively in favor of PlayStation, this very well may be the case.

In that case, PlayStation can just keep the 70/30 cut, devs won't be bothered enough to not put their games on PlayStation, and basically nothing significant will change, except for lower total revenue for Xbox. Then Xbox won't even be in a position to reverse that decision down the road. This loss may then reflect in fewer publishing deals, more AA games instead of AAA games, higher GamePass price, more MTX in games, etc.
 
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TimFL

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And this can easily backfire, too, by the way.

For example, what if 70% on PlayStation still turns out to be significantly more than 88% on Xbox for game developers? Considering the recent sales comparison data (Hitman 3, Nier), the split was 81/19 and 74/26 respectively in favor of PlayStation, this very well may be the case.

In that case, PlayStation can just keep the 70/30 cut, devs won't be bothered enough to not put their games on PlayStation, and basically nothing significant will change, except for lower total revenue for Xbox. Then Xbox won't even be in a position to reverse that decision down the road. This loss may then reflect in fewer publishing deals, more AA games instead of AAA games, higher GamePass price, more MTX in games, etc.
No good comparison because if the 12% cut means the game has to also be on GP / xCloud then it adds value to their subscription service, which in return will see further growth due to having more games on it (that wouldn't be on it if it weren't for that 12% cut deal).
 
Oct 16, 2017
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No good comparison because if the 12% cut means the game has to also be on GP / xCloud then it adds value to their subscription service, which in return will see further growth due to having more games on it (that wouldn't be on it if it weren't for that 12% cut deal).
So what you are really saying, is that MS is outright abandoning the main source of profits for a console platform, in order to go all in on Streaming? I guess that is consistent with what we already know.

Just remember, changing the way a game makes money has a direct impact of what kinds of games get made. This is why Arcade games are so different from Console games. From length, difficulty, and replay-ability. And in the same way don't expect Streamed games to just stay unchanged from what Xbox used to offer. You get exactly what you paid for, no more and no less, there are no true "bargain" in gaming.
 

elliot5

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Good. This means more revenue for smaller developers, and yes, even big publishers. The key here is that Microsoft wants streaming rights (not exclusive rights, seemingly). They want to avoid an Nvidia GeForce NOW situation where the games suddenly get pulled from the service because the greedier ones weren't getting a cut.

Well, now you get that cut, but Microsoft gets to bolster their xCloud / Game Pass service.

Little napkin math:
$60 * 0.70 = $42 post cut
$60 * 0.88 = $52.8 post cut

That's essentially a $11 difference. Game Pass Ultimate is required (for now) to stream and costs $15. I'm not a financial analyst or know how putting a game on Game Pass on console vs console+cloud works out, but I think in the end Microsoft still benefits by working out this deal for their cloud service.
 

Heisenberg007

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So what you are really saying, is that MS is outright abandoning the main source of profits for a console platform, in order to go all in on Streaming? I guess that is consistent with what we already know.

Just remember, changing the way a game makes money has a direct impact of what kinds of games get made. This is why Arcade games are so different from Console games. From length, difficulty, and replay-ability. And in the same way don't expect Streamed games to just stay unchanged from what Xbox used to offer. You get exactly what you paid for, no more and no less, there are no true "bargain" in gaming.
This is a very important point. Each business model directly affects the type and quality of games. For example, single-player games with no MTX at $70 retail price by Sony vs. Ubisoft vast RPG GaaS games with lots of DLCs and season pass vs. EA multiplayer games with in-game purchases and P2W loot boxes and mechanics.

Some people may not realize this now -- or may not want to accept this -- but if MS keeps going on this path (which it seems it will), the type of games they make will change over time for better or for worse. That may not happy tomorrow or in the next 3 years because games take a lot of time to make. But we will see its impact in the next 7-10 years for sure.
 

Dabaus

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And this can easily backfire, too, by the way.

For example, what if 70% on PlayStation still turns out to be significantly more than 88% on Xbox for game developers? Considering the recent sales comparison data (Hitman 3, Nier), the split was 81/19 and 74/26 respectively in favor of PlayStation, this very well may be the case.

In that case, PlayStation can just keep the 70/30 cut, devs won't be bothered enough to not put their games on PlayStation, and basically nothing significant will change, except for lower total revenue for Xbox. Then Xbox won't even be in a position to reverse that decision down the road. This loss may then reflect in fewer publishing deals, more AA games instead of AAA games, higher GamePass price, more MTX in games, etc.
Assuming it’s true, what this move screams to me is MS begging third parties not to abandon their platform. Due to shortages or other factors the series S/X is already behind the Xbox one which was already considered a major failure while the Ps5 is already ahead of where the PS4 was. You can see friendly media spin in the headline “MS plans big industry shake up” when it should read “MS begs third parties not to abandon platform.”
 

BeardGawd

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It's not an investment. Investment would be buying something. This is straight discounting their services. Basically a pricing war with the intent to force everyone else to do the same. The idea being it doesn't matter if your service sucks, if everyone else had to decrease their own services because the profitability dropped. And then by virtue of having more cash, you can then out-starve everyone until others quit from not being profitable. Basically what you do when you can't offer a better product.

But of course, the issue is that the higher share given to developers is not a flat sum but relate to how many copies of games that are actually sold. So the flaw in that plan is that if people rightly refuse to use a broken store that can't run games, then the developer wouldn't see that extra money. It doesn't matter how cheap you are charging rent of your store front if you don't get customers. Windows Store is a dead Mall trying to lower rent. Doesn't matter if the rent is dirt cheap if there is no foot traffic.
Presumably the developers/publishers themselves would then start helping to promote Xbox (since they will make more from each Xbox version sold). This could be additional marketing or even better optimization on Xbox devices. At the end of the day this should bring more desirable stores to the "mall" thus organically increasing foot traffic.
 

Trogdor1123

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I still don't see why. The number of revenue hits they are taking must be massive this generation. It must be starting to add up.
 
Oct 16, 2017
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Presumably the developers/publishers themselves would then start helping to promote Xbox (since they will make more from each Xbox version sold). This could be additional marketing or even better optimization on Xbox devices. At the end of the day this should bring more desirable stores to the "mall" thus organically increasing foot traffic.
You expecting 3rd party publishers to advertise for a console for FREE?

Look, there is a price tag attached for those things. If Xbox want 3rd party to give them preferential treatment then they need to offer CASH. And the cash rates is a known quantity, not something new. I have no idea why you think any company would advertise for someone else without payment.
 

reksveks

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A lot of weird comments but this is just a move that basically ask game publishers to give up the ability to negotiate a fee for streaming in exchange for a better cut initially so as consumers, there isn't a disconnect between your offline digital library and your online library. This ain't going to lead to lower prices but might lead to a situation where xcloud includes all of your games.
 
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reksveks

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You expecting 3rd party publishers to advertise for a console for FREE?

Look, there is a price tag attached for those things. If Xbox want 3rd party to give them preferential treatment then they need to offer CASH. And the cash rates is a known quantity, not something new. I have no idea why you think any company would advertise for someone else without payment.
They won't but it could lead to some interesting conversations about the marketing deals that they have with Sony.
 

Kenshin775

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This would seem like an unfair advantage for MS. Making these exclusive streaming deals now with third parties means if Sony tries to build up their streaming services to match Xcloud in the future they would be heavily handicapped.

MS is trying to keep their " Play anywhere on the Netflix of Gaming" advantage.

Xbox Gamepass/Xcloud = Play all your games anywhere on any device
Playstation equivalent in the future = Play some of your games on some devices

It would be a bad look to the consumer.
 
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BeardGawd

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You expecting 3rd party publishers to advertise for a console for FREE?

Look, there is a price tag attached for those things. If Xbox want 3rd party to give them preferential treatment then they need to offer CASH. And the cash rates is a known quantity, not something new. I have no idea why you think any company would advertise for someone else without payment.
The higher percentage of each sale IS the payment. It could incentives 3rd parties to better optimize their Xbox versions thus free promotion for example.
 

elliot5

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This would seem like an unfair advantage for MS. Making these exclusive streaming deals now with third parties means if Sony tries to build up their streaming services to match Xcloud in the future they would be heavily handicapped.

MS is trying to keep their " Play anywhere on the Netflix of Gaming" advantage.

Xbox Gamepass/Xcloud = Play all your games anywhere on any device
Playstation equivalent in the future = Play some of your games on some devices

It would be a bad look to the consumer.
It doesn't say exclusive, just that they want to have streaming rights. To avoid a GeForce Now situation. It's like getting rights to play music on your .. commercial or something. You still need approval. Doesn't mean nobody else can stream it or play it.

I would imagine getting exclusive streaming rights would be immensely more costly for a majority of 3rd parties, which is why the word exclusivity is missing.
 
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Boss Mog

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This is a pretty big deal.

This can only be seen as a good thing for the industry. Hopefully Playstation, and Nintendo follow suite.
It's actually pretty bad for the industry. Epic can afford to do that because they're not platform holders. MS on PC isn't a platform holder either. Sony and Nintendo rely on that 30% cut to finance hardware R&D, big AAA exclusives, etc... MS are probably rich enough that they can take the hit on the XBOX but Sony and Nintendo probably can't. You'd be asking them to reduce a huge chunk of their revenue by more than half.
 

DeepEnigma

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It's actually pretty bad for the industry. Epic can afford to do that because they're not platform holders. MS on PC isn't a platform holder either. Sony and Nintendo rely on that 30% cut to finance hardware R&D, big AAA exclusives, etc... MS are probably rich enough that they can take the hit on the XBOX but Sony and Nintendo probably can't. You'd be asking them to reduce a huge chunk of their revenue by more than half.
E.E.E.
 

TimFL

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So what you are really saying, is that MS is outright abandoning the main source of profits for a console platform, in order to go all in on Streaming? I guess that is consistent with what we already know.

Just remember, changing the way a game makes money has a direct impact of what kinds of games get made. This is why Arcade games are so different from Console games. From length, difficulty, and replay-ability. And in the same way don't expect Streamed games to just stay unchanged from what Xbox used to offer. You get exactly what you paid for, no more and no less, there are no true "bargain" in gaming.
They are not abandoning game sales. What I'm saying is, they probably did the math on this and can afford to take the 18% cut. It's not like they're gifting away the 18% difference, there'll be strings attached to it (e.g. game has to be featured on Game Pass / work with xCloud) so they can compensate the missing 18% in other places (because more people will sub to Game Pass to try that game or Game Pass Ultimate for streaming, more people inclined to go all-in on Xbox because it gives you the game you want to play as part of GP, less people inclined to buy that game on PS5 because you can play it "for free" on Game Pass). It's a balance act.

MS is forced to go the sub / streaming road because their platform is shrinking / "small" sales-wise compared to other gaming platforms. They are fortunate enough to have good financial backing, otherwise they wouldn't be able to do stuff like Game Pass or lowering store cuts.
 
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The higher percentage of each sale IS the payment. It could incentives 3rd parties to better optimize their Xbox versions thus free promotion for example.
Not really. Because right now the majority of third party games make more money on Playstation overall. So they would profit more by making improvements to Playstation version than Xbox because Sony machine has a larger install base. They are not going to do charity work for Microsoft for FUTURE profit, when the industry standard is to be paid upfront.

If the split was 50/50 between Sony and MS, then maybe you could have an argument. But right now it is like 70/30 in Sony's favour, which means third parties know who is paying the bills.

MS only has themselves to blame when they said they don't care about hardware sales anymore.Or perhaps they never believed in it and was lying. Regardless the hardware ecosystem difference is why your plan does not work.

You can't expect Third Party to promote your hardware; that is YOUR job as the platform holder. You have to promote your own hardware, and if you downplay it then you get what you deserved.
 
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elliot5

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They are not abandoning game sales. What I'm saying is, they probably did the math on this and can afford to take the 18% cut. It's not like they're gifting away the 18% difference, there'll be strings attached to it (e.g. game has to be featured on Game Pass / work with xCloud) so they can compensate the missing 18% in other places (because more people will sub to Game Pass to try that game or Game Pass Ultimate for streaming, more people inclined to go all-in on Xbox because it gives you the game you want to play as part of GP, less people inclined to buy that game on PS5 because you can play it "for free" on Game Pass). It's a balance act.

MS is forced to go the sub / streaming road because their platform is shrinking / "small" sales-wise compared to other gaming platforms. They are fortunate enough to have good financial backing, otherwise they wouldn't be able to do stuff like Game Pass or lowering store cuts.
First part of your statement, I agree with.

Second part, I don't. I don't think MS is forced to go with the sub route, but rather that's just modern Microsoft's business model. I can almost guarantee they'd be doing the same strategy even if they were the market leader in the console space. Office is the market leader in business tools, and yet it's a subscription now with 365. Azure is all subscription/service. Their Xbox platform is growing, just albeit not as rapidly as PlayStation and Nintendo have been with their recent success. I definitely agree they are fortunate to have the financial backing of Azure and Windows, allowing them to offer the sub service, though.
 

Kenshin775

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It doesn't say exclusive, just that they want to have streaming rights. To avoid a GeForce Now situation. It's like getting rights to play music on your .. commercial or something. You still need approval. Doesn't mean nobody else can stream it or play it.

I would imagine getting exclusive streaming rights would be immensely more costly for a majority of 3rd parties, which is why the word exclusivity is missing.

Ah I see. Thanks
 

Klayzer

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A PC only iniative, it would seem. I wonder if devs will publish on PC more than Xbox. Microsoft, will probably have some language in the contract, to protect Xbox from Windows store only releases, that some devs would try.
 

elliot5

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A PC only iniative, it would seem. I wonder if devs will publish on PC more than Xbox. Microsoft, will probably have some language in the contract, to protect Xbox from Windows store only releases, that some devs would try.
They have announced their PC change to 12%, but the legal paperwork or presentation shows Xbox moving to 88/12 in H1/2021 as well as the MS Store on Windows. So, we'll see if that gets announced some time soon like at E3.
 

hlm666

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Wake me when the actual price we pay for the game at full rrp drops by 18%. Seeing the majority of us are not developers and/or publishers this means a big fat zero to our wallets.
 

elliot5

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Wake me when the actual price we pay for the game at full rrp drops by 18%. Seeing the majority of us are not developers and/or publishers this means a big fat zero to our wallets.
I mean, I don't ever expect game prices to go down. However, a $70 game at 30% cut makes less money for the publisher than a $60 at 88% cut, so maybe it incentivizes $60 games for sales volumes while still pocketing more.
 

Clear

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Wake me when the actual price we pay for the game at full rrp drops by 18%. Seeing the majority of us are not developers and/or publishers this means a big fat zero to our wallets.

Actually, you'll likely just see the revenue taken from elsewhere. I mean you slim the margins on software and it no longer becomes prudent to sell hardware at cost or loss. Same deal with services and subscriptions, they'll just take a look at the balance sheets and decide that they need to make up the shortfall from there.

Were they to do this it'd be a seriously destabilizing move for the entire console industry; bear in mind that the entire console model is based on software licensing subsidizing hardware and services, its not the same as PC and its open-platform model.

Honestly, were they to try I'd expect Sony and Nintendo to hold firm on their cuts, and simply start buying up developers while seeing how long MS weather the losses for.
 
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DaGwaphics

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Okay. This is bigger than most might have originally thought.

QRSIzc-T-jpeg


So this would mean 3rd party games will be EXCLUSIVE to Xbox Cloud, locking out the like of Amazon, Tencent, and Playstation. Kinda dirty considering Sony have been giving Microsoft money towards the Cloud lately.

Yikes.

I don't think that necessarily reads as the streaming is exclusive. In the event that MS wants to open their entire store to Xcloud (basically becoming a stadia competitor with a much more complete library) they need the publishers to allow them streaming rights as part of the deal. Not all are doing that currently, which is why some gamepass games aren't on the cloud etc. Maybe this lowering of the cut would come along with the streaming rights being a forced part of the deal, meaning no streaming rights equals no place in the Xbox store. 🤷‍♂️
 

Bo_Hazem

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ethomaz

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Just remember guys it is Tom Warrior.
It can be true? It can.
But remember the Live Gold being free started with him.

 
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