[Rumour]Microsoft Cuts Indie (XBLA) Royalties in Half?

Bamelin

This rumour, courtesy of Kotaku, has been somewhat (not 100 percent yet) confirmed over at Neogaf with devs posting their discontent , although MS's official response has been fairly non committal.

In my opinion this is pretty bad news for XBLA as a whole. The profit sharing structure on XBLA in it's old form helps the little guy. The new changes slashes the royalties in half ... I believe that while larger publishers can afford such a cut, smaller devs will be hurt.

I always thought of XBLA as a hotbed of creative activity, with awesomeness being released at a huge rate. I guess MS decided they wanted a bigger cut, I hope this doesn't blow up in their faces (Bad PR, devs leaving for PSN Network, less creative chances taken on titles, etc).

Kotaku wrote:

News of Microsoft's democratization of indie game development was overshadowed this week by an increasing discontent among established indie developers that the company was halving the royalties paid to them for future Xbox Live Arcade projects, several well-informed sources told Kotaku.

Several developers directly affected by the cut told Kotaku that the once generous royalty share of 70 percent given to them by the company was within the past few months cut down to 35 percent.

The move, some believe, may be tied to Microsoft's future reliance on the recently announced initiative to deliver games created using the company's XNA software package to Xbox Live users for a still undisclosed price.

At least one developer I spoke with said they were considering moving over to Sony and its Playstation Network in light of the cuts.

Microsoft has been contacted for comment, but has not yet replied. We'll make sure to update as soon as we hear word.

Update: Microsoft has responded, and you can see what they have to say here.

Source

Angry

and who exactly is "Jim".

Dravalen

The frustrating part isn't that they cut rates, it's that publishers still get the higher rate.

From what I've heard in my various dev circles publishers get around 70% royalty where indie/self-publish are looking at a change from that 70% to 30%. I don't know if these numbers are the exact ones but it sounds like pretty close.

Honestly as cool as XBLA sounds in concept MS has done a pretty good job making it sucky. I've heard of at least a few devs who have finished games waiting to be released but are held back by Microsoft determining when to release they on their weekly schedule.

Unco-ordinated

Angry wrote: »

and who exactly is "Jim".

A journalist that's at GDC.

Anyway, this was discussed in the sales thread and yeah, it's a pretty bullshit move. While we have no clue what the royalties are on the PSN or WiiWare, I think it's pretty safe to assume they're a fair bit better than 35% if a developer is planning on ditching XBLA because of it.

Bamelin

Dravalen wrote: »

The frustrating part isn't that they cut rates, it's that publishers still get the higher rate.

From what I've heard in my various dev circles publishers get around 70% royalty where indie/self-publish are looking at a change from that 70% to 30%. I don't know if these numbers are the exact ones but it sounds like pretty close.

Honestly as cool as XBLA sounds in concept MS has done a pretty good job making it sucky. I've heard of at least a few devs who have finished games waiting to be released but are held back by Microsoft determining when to release they on their weekly schedule.

I've been pretty happy with the stuff appearing on XBLA ... but I can't help but think this move is a pretty flaggarant cash grab on MS's part. What bothers me is that it's the small indie devs that are really what keeps the stuff on XBLA fresh, interesting ... even somewhat edgey compared to the mainstream publishers.

This move seems to go against what XBLA was supposed to be about ... a platform for smaller unsupported developers to get their stuff out, while still allowing them to recoup development costs.

Blain

There's a pretty good write up on Game Set Watch.

My takeaway was MS will now charge about 35% for certification, effectively halving the developer's take. But you can also go through a publisher. You and the publisher then get to split 70%. This definitely means devs get less, but I'm really amazed they were getting more than 50% considering MS owns the channel.

Einhander

One of the biggest selling points (to me, anyway) of a 360 is the huge amount of cool, cheap, fun games on XBLA. Making it less desirable for devs (especially smaller companies that seem to have the most creative ideas lately) just doesn't seem like a sound decision to me, especially with the PS3 having an increasingly large selection of awesome games on PSN.

Microsoft seems to be the hare, getting a huge lead at first, and now slacking off with XBLA releases, mandatory prices for DLC, and now this with the royalty changes. All the while the tortoise-like PS3 has been slowly gaining momentum. And we all know how that story ended.

Mace1370

Bamelin wrote: »

Dravalen wrote: »

The frustrating part isn't that they cut rates, it's that publishers still get the higher rate.

From what I've heard in my various dev circles publishers get around 70% royalty where indie/self-publish are looking at a change from that 70% to 30%. I don't know if these numbers are the exact ones but it sounds like pretty close.

Honestly as cool as XBLA sounds in concept MS has done a pretty good job making it sucky. I've heard of at least a few devs who have finished games waiting to be released but are held back by Microsoft determining when to release they on their weekly schedule.

I've been pretty happy with the stuff appearing on XBLA ... but I can't help but think this move is a pretty flaggarant cash grab on MS's part. What bothers me is that it's the small indie devs that are really what keeps the stuff on XBLA fresh, interesting ... even somewhat edgey compared to the mainstream publishers.

This move seems to go against what XBLA was supposed to be about ... a platform for smaller unsupported developers to get their stuff out, while still allowing them to recoup development costs.

The only thing XBLA was about was making money. If the indie devs don't like the deal I don't see why they couldn't go elsewhere.

Dravalen

Blain wrote: »

There's a pretty good write up on Game Set Watch.

My takeaway was MS will now charge about 35% for certification, effectively halving the developer's take. But you can also go through a publisher. You and the publisher then get to split 70%. This definitely means devs get less, but I'm really amazed they were getting more than 50% considering MS owns the channel.

And that's a load of crap because if you are indie or a publisher you still have to go through microsoft cert to get published. Charge an upfront fee for a cert, it's a fixed cost to test. Don't charge a royalty rate determined by total sales.

[edit]
Jake Simpson's blog post here pretty much sums it up from the dev side of things.

Viscountalpha

Mace1370 wrote: »

Bamelin wrote: »

Dravalen wrote: »

The frustrating part isn't that they cut rates, it's that publishers still get the higher rate.

From what I've heard in my various dev circles publishers get around 70% royalty where indie/self-publish are looking at a change from that 70% to 30%. I don't know if these numbers are the exact ones but it sounds like pretty close.

Honestly as cool as XBLA sounds in concept MS has done a pretty good job making it sucky. I've heard of at least a few devs who have finished games waiting to be released but are held back by Microsoft determining when to release they on their weekly schedule.

I've been pretty happy with the stuff appearing on XBLA ... but I can't help but think this move is a pretty flaggarant cash grab on MS's part. What bothers me is that it's the small indie devs that are really what keeps the stuff on XBLA fresh, interesting ... even somewhat edgey compared to the mainstream publishers.

This move seems to go against what XBLA was supposed to be about ... a platform for smaller unsupported developers to get their stuff out, while still allowing them to recoup development costs.

The only thing XBLA was about was making money. If the indie devs don't like the deal I don't see why they couldn't go elsewhere.

If Sony is smart, they will take advantage of this situation. I thought when XNA was going to come out it would have decent support and microsoft would stop being complete jerks with how they license their stuff. I am sorely mistaken.

Mace1370

Viscountalpha wrote: »

Mace1370 wrote: »

Bamelin wrote: »

Dravalen wrote: »

The frustrating part isn't that they cut rates, it's that publishers still get the higher rate.

From what I've heard in my various dev circles publishers get around 70% royalty where indie/self-publish are looking at a change from that 70% to 30%. I don't know if these numbers are the exact ones but it sounds like pretty close.

Honestly as cool as XBLA sounds in concept MS has done a pretty good job making it sucky. I've heard of at least a few devs who have finished games waiting to be released but are held back by Microsoft determining when to release they on their weekly schedule.

I've been pretty happy with the stuff appearing on XBLA ... but I can't help but think this move is a pretty flaggarant cash grab on MS's part. What bothers me is that it's the small indie devs that are really what keeps the stuff on XBLA fresh, interesting ... even somewhat edgey compared to the mainstream publishers.

This move seems to go against what XBLA was supposed to be about ... a platform for smaller unsupported developers to get their stuff out, while still allowing them to recoup development costs.

The only thing XBLA was about was making money. If the indie devs don't like the deal I don't see why they couldn't go elsewhere.

If Sony is smart, they will take advantage of this situation. I thought when XNA was going to come out it would have decent support and microsoft would stop being complete jerks with how they license their stuff. I am sorely mistaken.

I really wish they would. It would force MS to step up to the plate and start competing.

OremLK

Viscountalpha wrote: »

Mace1370 wrote: »

Bamelin wrote: »

Dravalen wrote: »

The frustrating part isn't that they cut rates, it's that publishers still get the higher rate.

From what I've heard in my various dev circles publishers get around 70% royalty where indie/self-publish are looking at a change from that 70% to 30%. I don't know if these numbers are the exact ones but it sounds like pretty close.

Honestly as cool as XBLA sounds in concept MS has done a pretty good job making it sucky. I've heard of at least a few devs who have finished games waiting to be released but are held back by Microsoft determining when to release they on their weekly schedule.

I've been pretty happy with the stuff appearing on XBLA ... but I can't help but think this move is a pretty flaggarant cash grab on MS's part. What bothers me is that it's the small indie devs that are really what keeps the stuff on XBLA fresh, interesting ... even somewhat edgey compared to the mainstream publishers.

This move seems to go against what XBLA was supposed to be about ... a platform for smaller unsupported developers to get their stuff out, while still allowing them to recoup development costs.

The only thing XBLA was about was making money. If the indie devs don't like the deal I don't see why they couldn't go elsewhere.

If Sony is smart, they will take advantage of this situation. I thought when XNA was going to come out it would have decent support and microsoft would stop being complete jerks with how they license their stuff. I am sorely mistaken.

XNA isn't actually indie-friendly at all in my opinion. It's very hard to distribute XNA games on the PC due to all of the separate installers required, and good luck actually getting your game on XBLA.

I guess this new Live community thing (where you can distribute your game on Xbox Live and somehow make money off it) could change things, but that's not coming until the end of the year, and who knows how the revenue sharing will work out. They'll probably make you take even less royalties or worse, only offer free games for ad revenue.

Unco-ordinated

Dravalen wrote: »

Blain wrote: »

There's a pretty good write up on Game Set Watch.

My takeaway was MS will now charge about 35% for certification, effectively halving the developer's take. But you can also go through a publisher. You and the publisher then get to split 70%. This definitely means devs get less, but I'm really amazed they were getting more than 50% considering MS owns the channel.

And that's a load of crap because if you are indie or a publisher you still have to go through microsoft cert to get published. Charge an upfront fee for a cert, it's a fixed cost to test. Don't charge a royalty rate determined by total sales.

Seriously. Taking a pretty large chunk of the royalties for something as small as certification is absolute bullshit. And aren't they already earning enough money off the royalties from XBLA and DLC? Not to mention the millions they'll get from XBL subscribers.

Einhander

I guess the "Xbox line isn't actually turning a profit yet" schtick is really starting to hurt so they have to make something back somewhere?

Regicid3

MS launches a great system for Indie developers on Xbox Live and suddenly there's rumors of them cutting profits? I say this is all propaganda.

Honestly.

I know, I know... let me put on my tinfoil hat.

Polago

According to some checking up by one of my colleagues, Sony buys PSN titles (like everyday shooter) from the developer/publisher at a lump sum, and then proceeds to get all of the gross from it's sales. This is obviously quite different than the 30-35% (varies a lot depending on your individual contract, devkit terms, etc) royalty that XBLA pays out.

Would you prefer this as a developer? The chance of sales being neutered by an asteroids remake or "frogger" as Jeff Minter popularly singled out wouldn't matter anymore because you've received your money regardless of the title's successes or failings. You'd however lose out on royalties if your title sold big (like a geometry wars or something of it's kin) while only earning the name and notoriety.

Which option sounds better?

OremLK

Polago wrote: »

According to some checking up by one of my colleagues, Sony buys PSN titles (like everyday shooter) from the developer/publisher at a lump sum, and then proceeds to get all of the gross from it's sales. This is obviously quite different than the 30-35% (varies a lot depending on your individual contract, devkit terms, etc) royalty that XBLA pays out.

Would you prefer this as a developer? The chance of sales being neutered by an asteroids remake or "frogger" as Jeff Minter popularly singled out wouldn't matter anymore because you've received your money regardless of the title's successes or failings. You'd however lose out on royalties if your title sold big (like a geometry wars or something of it's kin) while only earning the name and notoriety.

Which option sounds better?

Depends on your budget and how much Sony is willing to pay you versus how many sales you think you could make on XBLA, of course. I know you were asking the question rhetorically, but yeah--there are a lot of factors involved.

Couscous

Polago wrote: »

According to some checking up by one of my colleagues, Sony buys PSN titles (like everyday shooter) from the developer/publisher at a lump sum, and then proceeds to get all of the gross from it's sales. This is obviously quite different than the 30-35% (varies a lot depending on your individual contract, devkit terms, etc) royalty that XBLA pays out.

Would you prefer this as a developer? The chance of sales being neutered by an asteroids remake or "frogger" as Jeff Minter popularly singled out wouldn't matter anymore because you've received your money regardless of the title's successes or failings. You'd however lose out on royalties if your title sold big (like a geometry wars or something of it's kin) while only earning the name and notoriety.

Which option sounds better?

I would go with PSN. I could always make a sequel and release it on the 360.

OremLK

Let's be clear about something here anyway: Even if MS does cut royalties down to 35%, this is stock standard for this business (by which I mean downloadable games). Look at any of the major PC portals from RealArcade down to Reflexive--40% is just about the maximum they will give you, and usually lower than that (even down to 15-20%).

70% was an amazing deal for developers, and it sucks that it may be going away, but I can't say it's surprising.

DarkWarrior

titmouse wrote: »

Polago wrote: »

According to some checking up by one of my colleagues, Sony buys PSN titles (like everyday shooter) from the developer/publisher at a lump sum, and then proceeds to get all of the gross from it's sales. This is obviously quite different than the 30-35% (varies a lot depending on your individual contract, devkit terms, etc) royalty that XBLA pays out.

Would you prefer this as a developer? The chance of sales being neutered by an asteroids remake or "frogger" as Jeff Minter popularly singled out wouldn't matter anymore because you've received your money regardless of the title's successes or failings. You'd however lose out on royalties if your title sold big (like a geometry wars or something of it's kin) while only earning the name and notoriety.

Which option sounds better?

I would go with PSN. I could always make a sequel and release it on the 360.

I'm not sure thats true anyway. I just watched an interview with the guy who is in charge of talent scouting for PSN titles and he said that "That Game Company" who made Flow are still being quite well paid for the sales of Flow.

Xagarath

Wiiware has the interesting quirk of only permitting one game per month per developer, so the big companies don't overwhelm the small/indy ones.
I wonder if that plus this will mean they generally start to get more indy support.

devolve

OremLK wrote: »

Let's be clear about something here anyway: Even if MS does cut royalties down to 35%, this is stock standard for this business (by which I mean downloadable games). Look at any of the major PC portals from RealArcade down to Reflexive--40% is just about the maximum they will give you, and usually lower than that (even down to 15-20%).

70% was an amazing deal for developers, and it sucks that it may be going away, but I can't say it's surprising.

I had a feeling this was the case.

It seems people are basing their assumptions off of the fact that PSN or wiiware are at the same level as xbla, when in fact their royalty system is probably worse than xbla today.

What most likely is happening here is that MS gave such a generous system in order to get developers to make games for xbla in the first place. Now that it's a success they don't need to be so mega-generous.

Now this doesn't change the fact that the perception of it being unfair may still blow up in their face even though it's not unfair at all, but that's almost a seperate argument than from what people are putting up in this thread.

Dareth Ram

Polago wrote: »

According to some checking up by one of my colleagues, Sony buys PSN titles (like everyday shooter) from the developer/publisher at a lump sum, and then proceeds to get all of the gross from it's sales. This is obviously quite different than the 30-35% (varies a lot depending on your individual contract, devkit terms, etc) royalty that XBLA pays out.

Would you prefer this as a developer? The chance of sales being neutered by an asteroids remake or "frogger" as Jeff Minter popularly singled out wouldn't matter anymore because you've received your money regardless of the title's successes or failings. You'd however lose out on royalties if your title sold big (like a geometry wars or something of it's kin) while only earning the name and notoriety.

Which option sounds better?

The option to cheaply port it to both.


Oh, look, I get a lump sum here to finance my next project... Oh, and it's selling well here too? Hot damn!

I have a friend whose company is doing this right now.


Honestly, this decision seriously will neuters a lot of the advancements XBLA has made for the industry. Sucks, but I guess we'll be seeing a lot more multiplatform indy games now so the developers will cover all their bases.

cloudeagle

devolve wrote: »

OremLK wrote: »

Let's be clear about something here anyway: Even if MS does cut royalties down to 35%, this is stock standard for this business (by which I mean downloadable games). Look at any of the major PC portals from RealArcade down to Reflexive--40% is just about the maximum they will give you, and usually lower than that (even down to 15-20%).

70% was an amazing deal for developers, and it sucks that it may be going away, but I can't say it's surprising.

I had a feeling this was the case.

It seems people are basing their assumptions off of the fact that PSN or wiiware are at the same level as xbla, when in fact they're royalty system is probably worse than xbla today.

What most likely is happening here is that MS gave such a generous system in order to get developers to make games for xbla in the first place. Now that it's a success they don't need to be so mega-generous.

Now this doesn't change the fact that the perception of it being unfair may still blow up in their face even though it's not unfair at all, but that's almost a seperate argument than from what people are putting up in this thread.

That's very true. Even if 35% is more or less standard, it practically feels like an insult after you've gotten used to getting 70%.