Microsoft once considered cutting Xbox store cut to 12 percent

Microsoft explored reducing its Xbox store revenue cut to 12 percent, according to documents obtained by The Verge that were filed in the ongoing Epic Games vs. Apple lawsuit.

Per The Verge, the documents list that “all games will move to 88 / 12 in CY21,” referring to 88 percent revenue going to the publisher and the remaining 12 being retained by Microsoft. CY21, meanwhile, points to the 2021 calendar year.

This would be a major change on Microsoft’s part since all three main console manufacturers — Xbox, PlayStation and Nintendo — take a 30 percent cut on game sales, leaving 70 percent to go to the game maker.

Steam, the dominant PC games marketplace, also takes a 30 percent cut. Fortnite maker Epic Games, which operates its own Epic Games Store on PC, is the only storefront to currently ask for a 12 percent share. However, Microsoft has confirmed plans to reduce its PC games cut to 12 percent starting August 1st.

Speaking to The Verge, a Microsoft representative confirmed that there “are no plans have no plans to change the revenue share for console games at this time.” That said, The Verge notes that Microsoft declined to specify whether the court documents were inaccurate or plans changed.

As it stands, there’s far less incentive for Microsoft to lower the revenue split on console. As noted on Twitter by industry analyst Daniel Ahmad, the PC marketplace is far more expansive than the Xbox console ecosystem, which compels Microsoft to try to win over more companies with a lower cut. “Publishers will put their games on Xbox regardless,” he pointed out. Xbox and other console manufacturers also subsidize the hardware, which makes the 30 percent cut more reasonable to companies.

While it seems unlikely that Microsoft will lower its console revenue cut anytime soon, the court documents shed some light on what the company has been thinking about in regards to the PC games cut.

“There is a proposal currently under Gaming Leadership Team consideration to adopt 88 / 12 as a public PC games revenue share for all games in exchange for the grant of streaming rights to Microsoft,” reads one document.

Exclusivity would be a way for Microsoft to build on its ever-growing Xbox Game Pass’ Cloud Gaming streaming feature, which is available on Android, iOS and web browsers in preview. The company also plans to launch the streaming feature in full on PC in the future with actual PC games, rather than the Xbox versions of titles.

Given that Microsoft is going forward with the 18 percent price cut reduction on PC, it’s unclear whether this exclusivity clause is currently part of its existing deals with companies on PC.

Source: The Verge