Microsoft shakes up PC gaming by reducing Windows store cut to just 12 percent

Illustration by Alex Castro / The Verge

Microsoft is shaking up the world of PC gaming today with a big cut to the amount of revenue it takes from games on Windows. The software giant is reducing its cut from 30 percent to just 12 percent from August 1st, in a clear bid to compete with Steam and entice developers and studios to bring more PC games to its Microsoft Store.

“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.”

These changes will only affect PC games and not Xbox console games in Microsoft’s store. While Microsoft hasn’t explained why it’s not reducing the 30 percent it takes on Xbox game sales, it’s likely because the console business model is entirely different to PC. Microsoft, Sony, and Nintendo subsidize hardware to make consoles more affordable, and offer marketing deals in return for a 30 percent cut on software sales.

Microsoft’s new reduction on the PC side is significant, and it matches the same revenue split that Epic Games offers PC game developers while also putting more pressure on Valve to reduce its Steam store cut. Valve still takes a 30 percent cut on sales in its Steam store, which is reduced to 25 percent when sales hit $10 million, and then 20 percent for every sale after $50 million.

Steam is still the dominate games store on Windows.

Despite this larger revenue cut, Steam continues to dominate mind and market share among developers, but many don’t think the 30 percent fee is fair. A recent survey of 3,000 game industry professionals found that most game devs don’t think Steam earns its 30 percent revenue cut. Microsoft’s move will only increase the pressure on Valve further.

Competing with Steam is still a big challenge. Microsoft and Epic Games have both struggled to convince game developers to list titles in their stores to compete with Steam. Epic Games has tried exclusives to lure developers in, but a big part of Microsoft’s struggles have been related to forcing game developers to use UWP in the past, and the terrible Windows store app that exists today.

Microsoft finally started supporting traditional win32 games in its store a couple of years ago, but this change alone hasn’t helped the Windows store compete with Steam. The 12 percent cut might tempt more developers into listing their games in Microsoft’s store, particularly if the company can improve the poor experience for end users.

Microsoft is promising Windows store improvements.

Booty is promising just that, with “improved install reliability and faster download speeds over the next few months.” Microsoft is also reportedly working on an overhaul to its Windows store that could pave the way for developers to be able to submit any Windows application to the store — including browsers like Chrome or Firefox. These store improvements may even allow third-party commerce platforms in apps, which would be a big shift alongside this 12 percent cut.

Beyond the store, Microsoft still needs to significantly improve PC gaming. The Xbox Game Bar has been a welcome improvement, but services like Steam and Discord are far more popular than Microsoft’s alternatives. The world’s biggest PC games are also fighting a huge surge in cheaters and hackers, and Windows doesn’t do enough to help game studios protect their games.

“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,” says Booty. Microsoft still has more to share on its PC plans and general Windows improvements in the coming months. Booty teases a promising second half of 2021 “when our work across the entire PC ecosystem has the potential to come together in a way that propels the industry forward and brings great games to more gamers around the world.”

Comments

Great move. People might actually start to buy games on the Microsoft Store if it’s cheaper there.

I absolutely hate the Microsoft Store, but this is a great move indeed. I really hope they work on the store with the probable increase in traffic that will be headed their way.

The store not only needs a make over but to this day, nearly 6 years after it launched, people still have issues with regards to downloads.

That’s absolutely part of the shitty experience. The entire thing is a mess in my uses. I would love to have a centralized home where I can find free utilities, support devs that make useful apps, and have a single place to download all my apps, but MS makes all those things really hard and it’s simply easier to just manage each Windows app that I use directly from the apps website and just use my email as the place to store my keys and download links.

Also the search on the store is absolute garbage the last time I used it. I remember literally searching for the exact name and not seeing it anywhere in any of the results. Had to find a link to the page and use the Microsoft Store website to buy the app and then go back to the store and download it through my purchases or something like that. I hope they’ve fixed it since that experience, but I don’t have high hopes.

Downloads are way way too slow. Steam and battle.net can both fully use my connections download speeds, but the Microsoft store maxes out at 50% and most of the time is around 30-40% it just takes so much longer to download these large games a lot of the time I just prefer to get them on steam.

I have 600mbps internet and the MS store maxes at 12mbps and averages about 8mbps. Steam is better, but still throttled to peaks of around 100mbps and typically about 25mbps during peak hours. EGS and publisher store fronts are the only ones i’ve seen hit into the hundreds of mbps for sustained periods. Not always, but during low traffic periods it’s reliably far faster.

And pretty much all of them throttled their download speeds to varying degrees during the pandemic to appease ignorant politicians.

You mean the telecommunication companies that charge us a boatload for out dated and poorly managed services. In the name of capitalist profit. But ignore the other part of capitalism. Competition and improvement

Six years? Pretty sure they had a different crppy store back then. The games I bought on it lost all their saves and I was pushed to a different launcher.

I remember back in 2015, when they moved a bunch of the games off whatever store they had back then. I lost my save. I hate Microsoft’s bs. I know better than their tricks.
That and three 360 red rings and their shitty OS. I’ll pay a little more and stay with Steam.

Nah, it’s awful to use, 18% cheaper (less to consumers as I’m sure devs will take a cut) isn’t enough to make me want to use it.

To my understanding, the Xbox Games Pass for PC worked with the Microsoft Store as its backend, and I had no complaints even while it was in "Beta." If I played more games to justify paying even the $15/month, it would be the main service I’d use.

I have constant issues with it on my PC. And that’s because I have multiple hard drives it seems.

I can install games to my C: no problem. Should I choose to install to my other 2 drives (i have slow drives where I can put games that load times are bad regardless), I constantly get issues with authorization.

I even completely re-installed windows (because it’s just a Gaming PC), and I still have issues.

It’s honestly a pain in the ass.

Steam or pretty much any other provider has zero issues. Game gets installed where I pick, no problems. It likely has to do with Microsofts crazy licensing.

Huh, weird. I actually liked how the XGP installed through the Windows Store because I could move the install folder of existing games to my SSD with a few clicks in the install settings and nothing would break, and it would just work. No way to do that with Steam or EGS without reinstalling (to my knowledge, anyway).

I like all the rest of it, just this damn error is driving me nuts (0×80070005). And I’ve tried all the solutions, but it just refuses to install on my secondary drive, particularly for games I’ve installed prior. New games I’ve never downloaded before works fine on any drive. It’s just odd.

If the EGS is anything to go by, the lower cutt will not lead to cheaper games.

Of course not. Developers just get more money for charging the same for customers. There’s literally no incentive for developers to drop prices. Microsoft isn’t even a great example to follow, their games are priced higher than pretty much any game on PC where I live(here any new AAA game is priced at 60€, yet Microsoft charges for their own games 70€)

There is absolutely an incentive for developers to drop their prices on the MS store. Take a $60 game for example. At 30%, Steam takes $18 of every game sold, while at 12%, MS would only take $7.20. That is a difference of $10.80. That means that if the developer sold the game $5 cheaper on the MS store, they would still make $5.80 more on every copy sold there over steam. More copies sold on the MS store means more money for the developer, which means they would want to incentivize gamers to buy their games there.

There’s an incentive, but in practice, this doesn’t seem to happen. That doesn’t mean it won’t; it just hasn’t happened yet. The real big moves would be MS Store third party exclusives and a cut fee for xbox games as well. The move they made – because what gamers use the MS store – is largely symbolic.

They’d also need to offer free game specials like EGS offers. The Windows store at best only offers deals, but nothing earth-shattering and usually not free.

Which is great, more money for the people that really work hard everyday to deliver you that sweet game. They deserve that increase, in fact, it is really stupid that a digital store asks so much . I understand there are maintenance costs to maintain the store, but for sure it is not higher than a full dedicated server of a game that is hosting so many players everyday, live. MS will win a lot more if all devs are interested in bringing their games to MS store…

Yes, millionary shareholders really need my extra 18% payment…

That-s a bit of an ignorant comment. Shareholders are the people who invested in a company so that they can have the $ and resources to build you a game. They get a % of the value but % goes also to the developers, CEO and so on… as bonuses if they meet certain sale numbers and so on… depending on the contract.

And you know all indie studies don-t have the big shareholder money, many times it just a few developers building a really nice indie game… So when then cut the % of the store, it is really great because it means that store can compete with others in terms of pricing, increasing the likelihood of receiving more games since there will be more profit for the creators or even share holders of of the company or just small creators of the game. Shareholders is a good thing, it is people with money that invest in the work of other people to get that project done.

It’s way more likely that developers will profit more instead of prices being dropped. Which is a good thing, given how many games are forcibly released in alpha state these days.

This almost certainly won’t impact the price consumers see. Maaaaybe short term. Long term I just don’t see it.

The best thing about the Microsoft store is that it honors things like Play Anywhere and Cloud Saves with Xbox. As a consumer, that is what gets me in the door, but not every developer takes advantage of it.

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