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Fully agree. I don't see them dropping down to 12% for console. Perhaps 20%, but even that seems unlikely.
you can imagine the likes of Nintendo and Sony will not be amused.
Still, they would need spectacular growth for this to work economically.
Hottest Take you will read today:
This will ultimately be bad for developers, but it might take a decade or more.
This is a business plan to ultimately make more money and there has to be a plan behind it, and going by MS's current mission statement, this continues to make Xbox the "Netflix of games" with Game Pass. On its face, it's a drive to get more, and more exclusive support, on the Xbox platform by opening up deep pockets. The final goal of 12% share to MS is a smoke screen. This isn't about about getting more money in the pockets of developers (at least in the long term), it's about making Xbox the place to put games.
From there, it continues to be about pushing Game Pass as the de facto way for consumers to play games. I suspect the very long term plan is to condition customers to own nothing and just pay subs, just like the productivity market. It could take a very long time, but that's ultimately the goal. Simultaneously, it's to make Game Pass the de facto sub service, with exclusive games and low prices.
Once the market is cornered enough, and users are conditioned to play that way, the 12% cut to devs is irrelevant, because MS sets ALL the prices for content on Game Pass. They become the single buyer (AKA a monopsony), rather than a distributed market with millions of individual small buyers, and they set the price. Will they be the ONLY buyer in town? Unlikely, but working the market from a purchase base of a couple hundred million into, say, five major buyers, is an excellent way to obtain leverage, especially if you have deeper pockets to subsidize extinguishing your competitors.
This will ultimately be bad for developers, but it might take a decade or more.
This is a business plan to ultimately make more money and there has to be a plan behind it, and going by MS's current mission statement, this continues to make Xbox the "Netflix of games" with Game Pass. On its face, it's a drive to get more, and more exclusive support, on the Xbox platform by opening up deep pockets. The final goal of 12% share to MS is a smoke screen. This isn't about about getting more money in the pockets of developers (at least in the long term), it's about making Xbox the place to put games.
From there, it continues to be about pushing Game Pass as the de facto way for consumers to play games. I suspect the very long term plan is to condition customers to own nothing and just pay subs, just like the productivity market. It could take a very long time, but that's ultimately the goal. Simultaneously, it's to make Game Pass the de facto sub service, with exclusive games and low prices.
Once the market is cornered enough, and users are conditioned to play that way, the 12% cut to devs is irrelevant, because MS sets ALL the prices for content on Game Pass. They become the single buyer (AKA a monopsony), rather than a distributed market with millions of individual small buyers, and they set the price. Will they be the ONLY buyer in town? Unlikely, but working the market from a purchase base of a couple hundred million into, say, five major buyers, is an excellent way to obtain leverage, especially if you have deeper pockets to subsidize extinguishing your competitors.
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Yeah, that would be an important move that is sure to put the pressure on every other platform charging more. Everyone will have to match them sooner or later.
They wouldn't need to match though. This isn't a straight decrease. They are offering a lower rate in exchange for streaming rights.
Oh, it seems I missed that. So they would offer a lower rate to those who agree to put the game on Xcloud?
I'm curious to know if this means exclusive rights or just adding support for xcloud.
When people here say, they don't believe bigger publishers would not go for the 30%->12% better cut (that's almost 26% more profit for them! That's a lot, if we are talking Xbox console game sales too later on), I think many of the publishers WOULD do it at THIS POINT in time. Because... how much money do they make in the first 2 years of a title and how much money would they lose that other streaming services would offer them to have their game on their platform. They almost lose nothing at this point in time. If streaming should take off and there will be many services in the future, most of those games wouldn't make them a lot of money anymore, because they're old news.
Could be different if a game is mostly SP and you think you have a classic on your hands that will still be played a decade from now.
Could be different if a game is mostly SP and you think you have a classic on your hands that will still be played a decade from now.
Tom Warren recently wrote an article about the meaning behind MS's move to lower their PC cut of games to 12%. Like it was a shot aimed at Apple and how they're "quietly" supporting Tim Sweeney's efforts in their court battle against Apple.
If they do this for Xbox as well then it'll be a direct shot at other platform holders. The irony being that Sony is investing heavily into Epic but it is Epic that opened up a can of worms that might potentially impact their bottom line.
If they do this for Xbox as well then it'll be a direct shot at other platform holders. The irony being that Sony is investing heavily into Epic but it is Epic that opened up a can of worms that might potentially impact their bottom line.
Do you have any sources that says that half of their entire gaming revenue is only on DLCs for these few games?
1. Such growth is not that impossible when you factor in that MS is requiring devs to agree to allow the game on Game Pass to get 88% cut. (we don't know the whole story here yet, so we'll have to wait and see what happens here and DLCs are not included as part of Game Pass).
2. They don't need to sell xbox for GamePass subs, it will be available on any platform with a web browser; that means Android, iOS, PC and Macs that doesn't need to be beasty at all.
3. Game Pass doesn't include DLCs and such, so more customers would still pay to get more. There was an article somewhere saying that devs have noticed people are spending more time and money on their GamePass titles and their sales did not drop: https://www.forbes.com/sites/davidt...ng-developers-some-surprises/?sh=6e6bf0ff62b4
4. MS has already done this with GameStop to share some of the revenue on all digital revenue for every xbox sold at GameStop, so it is not impossible. https://arstechnica.com/gaming/2020...e-gamestop-a-share-of-xboxs-digital-revenues/
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Just because they planned it at that time doesn't mean it's gonna happen. A whole lot has happened in gam development.
The Xbox division? Yep. MS revenue? Not that much...
Xbox ambitions are to get in the hands of every gamer regardless of the device they use, hence xCloud. If they get that big, could they justify a 30% cut? Wouldn't they get in the same spot as Apple is right now? Better reduce the tax than later. Lose some single digit billions and double digit in the future.
Odd take considering you benefitted from a deal with Microsoft and Xbox in the past that by all accounts is worse than the one you are seeing presented in a theoretical context here.
Sony, Microsoft, Apple and others all want to be the one left on the mountain top. This move could come from any of them and I wouldnt be surprised from here on
The theoretical long term or theoretical short term deal proposed here?
Short. We have no real way to extrapolate what a long term deal might look like but anything that puts more money in the developers hands seems like a great deal to me.
If we wanted to doomtheorize long term:
Sony drop their cut to 11%, Microsoft match
Both companies make less money from that division the following year due to a decreased cut. Nintendo keep being Nintendo.
The industry levels out at 11% and things continue.
Just because the exclusivity deal ends in three months doesn't mean it'll come to PS5 then and there. Same way FF7 exclusivity deal was a year and ended, but there is still no date for it on the Xbox.
So basically ms is all in on gamepass. That's not really surprising, nor meant to be I think. Everyone knows ms wants more and more subs for gamepass.
I still think devs would benefit from having both more money per sale, and also having more people play their titles through gamepass.
Not paying $60/$70 to play a game but instead having everything just be available on one or more subscription services sounds amazing
Game ownership is highly overrated
This is how it worked, the game was cheaper on Epic than it was on Steam. There was nothing illegal about it. Some publishers/developers took their games off of the site when Epic had a coupon because they did not want the suggested retail of new games to be cheaper, that was a different situation than what Red Dead Redemption 2 was.
Anyone arguing that Epic does not have better deals on some titles in comparison to Steam has no idea what they are talking about and won't ever admit Epic Game Store does have some benefits at times to the consumer.
That's possible, but nothing points to that. If the companies start making less money without plans to target more money in the future, leaders will be ousted and new heads will have different plans. These companies don't make a large scale change in hopes that they make less money.
Do you actually think that dropping the cut to 12% is to just get more money in the hands of developers and maybe get some companies to make a few more games for Xbox? Like, long term, not the PR. Someone did the math up-thread, the amount of differential income loss on the cut decrease is....unlikely to be made up in volume.
So I guess I'd toss it back to you - what part do you think the drop to 12% plays in an overall Xbox strategy?
It's definitely more convenient. There's a lot of other ways to buy/play games than purchasing them day one though. But from the consumer side, it's an amazing deal because it's structured to be an amazing deal, no doubt.
I said they would make half the money from Fortnite and Call of Duty, not that they would make half the money.
Your point was that Epic was "passing savings " (from 12%) to you. They arent passing saving from the 12%, but rather they are spending extra money to get you to buy the game there. Yes, you get a discount but the origin of the discount is a completely different beast. They do not come from the reduction of the cut but rather Epic trying to entice people to buy there (as they are selling any game below 80$ at a loss even without account structural costs). "Passing savigs" would be the case for Metro Exodus for instance were the publisher reduced the base price due to better cut (but that was a PR move and never really happened afterwards).
I am unsure how you read my post because the illegal part was not to your quote but to Jamrock regarding a different situation (Sony forcing price parity on other places).
I would assume xcloud but if you check page 11 of the document you can see their wording. It just says reduction in fees in exchange for streaming rights. Not sure if that means exclusive or just having it on xcloud. It's not very explicit.
My take on this topic is that this is brilliant strategy in so many ways, maybe more than the ones planned and desired.
1. Microsoft plans for Xbox is to put games on the hands of everybody, regardless of device (PC, Xbox, Streaming). If they achieve this goal, they will get so big that they won't be able to justify the 30% cut anymore. And face a court battle just like Apple is facing now. So, considering their ambitions, it makes sense to lower their cuts now and lose less money. If they wait too much, they will have angry people on courts that want lower taxes and shareholder pressure to keep it as it is.
2. It makes exclusity deals considerably more expensive for Sony and Nintendo, as they will have to cover greater sums of money. Also, Devs will look more kindly to the Xbox ecosystem.
3. It will put more pressure on Apple to reduce their app store cut, while both battle the market cap throne war (2T dollars as of now). I bet that, if antitrust comissions favor Epic in their case, it will have significant implications for Apple stock and market value.
4. It will put pressure on Sony, and much greater a pressure, as gaming revenue is their main source of money. This is a double win, because MS already is showing us that Sony can't win the money war if MS is into it. Much less if Sony resources are reduced by more than half.
This point here is really not so good for Sony, but I guess it goes to a deeper conversation. If we really care for the devs, speacially smaller ones, but also the raising risks and costs of gaming development, 30% is not a fair cut.
5. This will increase creative freedom, as the parameters for a sucessfull game will change and devs will try different things. Let's not forget that many studios that MS acquired were struggling financially. Even Bethesda was having problems with increasing monetization. Ninja Theory devs had to do gigs on other projects until they had the money to make Hellblade.
So, to summarize. I don't know MS true intentions with this, but regardless, it is the better thing for the industry. Yes, they are in a position where they have much more to gain from this than anyone else, but still, they shouldn't not do it just because of this. Do it now, because it's better for the devs (for whom I care the most) and for the industry, but not that good for Apple and Sony shareholders (mostly Sony).
1. Microsoft plans for Xbox is to put games on the hands of everybody, regardless of device (PC, Xbox, Streaming). If they achieve this goal, they will get so big that they won't be able to justify the 30% cut anymore. And face a court battle just like Apple is facing now. So, considering their ambitions, it makes sense to lower their cuts now and lose less money. If they wait too much, they will have angry people on courts that want lower taxes and shareholder pressure to keep it as it is.
2. It makes exclusity deals considerably more expensive for Sony and Nintendo, as they will have to cover greater sums of money. Also, Devs will look more kindly to the Xbox ecosystem.
3. It will put more pressure on Apple to reduce their app store cut, while both battle the market cap throne war (2T dollars as of now). I bet that, if antitrust comissions favor Epic in their case, it will have significant implications for Apple stock and market value.
4. It will put pressure on Sony, and much greater a pressure, as gaming revenue is their main source of money. This is a double win, because MS already is showing us that Sony can't win the money war if MS is into it. Much less if Sony resources are reduced by more than half.
This point here is really not so good for Sony, but I guess it goes to a deeper conversation. If we really care for the devs, speacially smaller ones, but also the raising risks and costs of gaming development, 30% is not a fair cut.
5. This will increase creative freedom, as the parameters for a sucessfull game will change and devs will try different things. Let's not forget that many studios that MS acquired were struggling financially. Even Bethesda was having problems with increasing monetization. Ninja Theory devs had to do gigs on other projects until they had the money to make Hellblade.
So, to summarize. I don't know MS true intentions with this, but regardless, it is the better thing for the industry. Yes, they are in a position where they have much more to gain from this than anyone else, but still, they shouldn't not do it just because of this. Do it now, because it's better for the devs (for whom I care the most) and for the industry, but not that good for Apple and Sony shareholders (mostly Sony).
I think a lot of people are missing the fact that it's not changing to 12 percent for everyone. It's proposed to change for devs that give ms streaming rights. It's just like them paying for the streaming rights separately. This won't make a huge difference to Sony or nintendo unless they want streaming rights as well. The op probably needs to be updated.
I disagree. I think people are mixing streaming rights with GamePass. Not every xCloud game will be on GP. You will be able to play the games you purchase too. They are just preventing devs to charge a premium to run the game on the cloud. And it really doesn't make sense, since the player already purchased the game.
GamePass deals are a different thing.
Did you respond to the wrong person? People keep saying Sony well be boned by this move and I was pointing out that you have to meet specific conditions to get this reduced rate. Also many devs will not want to sign over their streaming rights for a unknown sum of money.
I am not expecting them to pass the savings on to me because Epic is getting less revenue, so why would they? It would be up to the publisher/developer to do that since they are getting a lrger piece of the cut. What I do hope in all of this is those savings get passed onto the developer so they can hopefully put that back into development and not the Bobby Kotick type of people but we all know how pay scales work as you go up the ladder.
All I was implying is that Epic has passed savings onto me in other ways.
This is a pretty amazing move if true. Honestly Xbox should consider applying it universally, not just for streaming rights attached, it'd shake the entire industry (PlayStation, Nintendo, Steam, Apple, etc).
Oddly Nintendo's likely in the better position to shift to a lowered royalty standard given they derive so much revenue from their own games and MTX. They could survive a cut to 12% with comparably little impact to their margins versus Xbox or especially PlayStation.
They also came in at an industry low pricepoint ($299, $199 Lite) and unlike the other consoles they had to include a screen and battery. There's just not as much room to drop when you don't launch at $399 or $499.
Oddly Nintendo's likely in the better position to shift to a lowered royalty standard given they derive so much revenue from their own games and MTX. They could survive a cut to 12% with comparably little impact to their margins versus Xbox or especially PlayStation.
Content is king and lowering platform tax is relatively cheap and less risky to invite more of it than for example going to Atlus with moneyhats.
No. My point is related to what you said. GamePass deals are not the same as streaming rights. As so, I don't see why a dev would reject it, as it would would mean more people to buy and play its game. At least for the majority of devs... Epic doesn't allow Fortnite on xCloud, as they see MS as their competitors.
Conclusion is that the tax cut would put, in fact, a lot of pressure on Sony and Nintendo.
Up to publishers. Really dropping the cut is a shot across Sony's bow.
It would put a lot of pressure on Sony to also lower prices or devs would potentially switch to Xbox as lead platform.
Did you miss the bit about MS wanting streaming permission to get the 12% on PC games? How does that shaft Game Pass? It only helps.
It all depends. With this you don't know how much you are selling your streaming rights for. It all depends on how much you still. However making a separate agreement would come with a definite dollar amount upfront.
When and if xCloud get that big, the devs will run after MS to put their games on xCloud, not the opposite. Again, highlighting that xCloud is a platform and GP is a subscription. They will want to sell their game so people on smartphones and browsers can play it. To put it on GamePass is a different talk.
xCloud runs Xbox hardware, so the dev doesn't have a reason to not put it there. Stadia paid the devs because they had to port the games to run on it.
Was talking about STALKER 2 being console exclusive for 3 months.
If that's the case we need OP and title to be updated. It's very different from just cutting their share, it's actually about avoiding nvidias issues with publishers taking the games down the platform
yeah do people think that they hate money or something, companies don't act out of generosity. streaming rights is a pretty big thing to leverage considering how many publishers want to jump in that space.
No, I'm sure that moneyhat games is cheaper than losing half of your income from third party.
Still not sure why that is a bad thing (or any relation) to PC. Console exclusive just means it won't be on PS5 for at least 3 months. Doesn't exclude PC.