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Microsoft slashes its Windows Store cut to 12 per cent so that developers stop running to Steam

Microsoft's new revenue split for developers is an attempt to challenge the dominance of Valve's Steam on Windows 10.

twitter-logoShubham Verma | April 30, 2021 | Updated 10:33 IST
Source: Reuters

Highlights

  • Microsoft has reduced the cut on sales of games from 30 to 12 per cent.
  • The new commission is only for games sold through Microsoft Store on Windows 10.
  • The new move is likely to bring more developers as Microsoft wants to compete with Valve's Steam.

Microsoft is announcing a big change for games on the Microsoft Store. The software company has said it is reducing the commission it charges developers on the sale of their games from 30 per cent to just 12 per cent, in a move that is likely to increase the appeal of Microsoft Store to game developers against Steam. The new fee is only for PC games that people buy from the Microsoft Store. Meanwhile, Microsoft would still take its 30 per cent cut on Xbox console games.

The biggest competition for Microsoft Store is Steam, which released a staggering 10,263 games in 2020, per a report by Statista. That is because Valve, the company that owns Steam, has a different revenue-sharing plan. It would still charge 30 per cent to developers on sales of their games on the Steam store, but it reduces the cut to 25 per cent once sales hit $10 million, followed by just 20 per cent in commission for every sale of $50 million on the store. Microsoft is not matching Valve's strategy. Instead, it is matching the revenue split Epic Games offers developers on sales of games on the Epic Games store. And this new strategy is likely to shake up the gaming distribution business for the Windows 10 platform.

"Game developers are at the heart of bringing great games to our players, and we want them to find success on our platforms," says Matt Booty, head of Xbox Game Studios at Microsoft. "A clear, no-strings-attached revenue share means developers can bring more games to more players and find greater commercial success from doing so."

Although Steam has been the most expensive store to sell games through, for developers, it is the leader in the market. Both Microsoft and Epic Games have tried to convince developers to list their titles on respective app stores, but Steam is where they usually end up selling games. And that has been a challenge for both Microsoft and Epic Games. Microsoft's challenges in driving more developers to the Microsoft Store have not been just about the pressure from Steam. Its own Microsoft Store has rarely managed to attract developers.

Windows 10 began to support traditional 32-bit games some years back, but the whole layout of the Windows Store (now called Microsoft Store) has been anything but attractive for developers. Many Windows 10 users have complained their games do not get patched as fast as they do on Steam. And this is among other problems people have flagged against the Microsoft Store. With the new 12 per cent fee, the software giant is hopeful to bring more developers and drive sales of games more than Steam does. But it is going to be a bit difficult.

"We know that we still have a lot of work to do, but based on the response from both PC gamers and PC game developers, we think that we're headed in the right direction for this community with the investments we're making," Booty said in the statement.

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