GameSetWatch breaks down XBLA royalties cut
by Griffin McElroy 
{ Feb 24th 2008 at 7:00PM }
With the news that the 70 percent royalties cut for independent developers of Xbox Live Arcade titles had been cut in half, the indie gaming community was irrevocably up in arms, with some XBLA devs even threatening to switch platforms. However, the reasoning behind the cut is not as cut-and-dry as "M$ jus wants moar money" -- according to a recent GameSetWatch report, a number of factors led to the royalty shrinkage.
After a bit of Michael Clayton-esque fact finding, they discovered that the cut only affects first-party indie developers (that is, devs that publish their games directly through Microsoft's XBLA department), and while the returns from their product will indeed be half their original value, Microsoft will now cover many of the fees that the developer must address before their product can be sold -- such as ESRB certification, and localization. Ultimately, this means that their games will cost less to produce, but make less after retail -- slightly better than a flat-out cut, but not much consolation to the Ramen-fueled indie developer.
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Reader Comments (Page 1 of 1)
Benny @ Feb 24th 2008 7:11PM
So basically they're saying "We're big enough to fuck you now, so we will".
To be fair, despite the supposed threats from indie developers to jump to PSN, Xbox Live is just too popular with consumers to ignore.
Microsoft will get away with it. EA will buy Take Two. The world will end.
seasidebaz @ Feb 25th 2008 2:38AM
no dice, ea is bidding for take two. so the world will end in a slightly different way.
seasidebaz @ Feb 25th 2008 2:40AM
... ea are bidding but will not be able to buy, is what i meant to say. take2 are too big! and now i feel silly
Benny @ Feb 25th 2008 3:12AM
Yeah, but for how long? So maybe EA end up having to wait until after GTAIV comes out, and end up having to pay another half a billion. But to but to be honest unless another bidder comes along or competition laws intervene, it seems like a merger is an inevitability.
John McPoop @ Feb 24th 2008 7:11PM
Yeah I am sure that the cheaper development cost will = the loss in actual profit. What a straight up scam. How much does anyone want to bet that PSN development has just become more attractive to these indy developers. Especially with that handy dandy Power Point (funny) presentation at GDC.
I would rather take the hit upfront rather than give up half of my expected earnings in ANY situation. But you know what they say "A little bit of something is better than a whole lot of nothing".
XanthouS @ Feb 24th 2008 7:12PM
And this is a surprise? Microsoft just continues digging a hole for itself with crap like this.
Nintendo thought it was untouchable with the NES. It dicked around with developers left and right. When Sony launched a competing system, many third party devs switched focus to the PSX. It took several console generations (and a brilliant idea) for Nintendo to regain a respectable market share.
If you don't learn from the past, you'll be forced to relive it.
KaneRobot @ Feb 24th 2008 9:03PM
I hate to say it since the 360 has been the best console available as far as features and games, but the last 3 months or so have NOT given me a very bright outlook for the XBox brand's future.
Important companies like Bungie jumping ship, continued RRoD issues, their DRM still pissing people off left and right, console shortages, and to a lesser extent, HD DVD biting the dust...and now this.
None of this bodes well for the XBox 360. It's like they're asking Sony to pass them by now. What the hell happened? A year ago they had the PS3 beaten before it ever got out of the blocks, now they've committed colossal fuck-up after colossal fuck-up and turned it back into a race...while angering a lot of their fans and business partners in the process.
hotnutz @ Feb 25th 2008 6:37AM
MS has an old school mentality when it comes to the web and the new generation of companies. They have been sliding for the past 3 years and their attempt to buy Yahoo is a sign that they are desperate. They started too many wars and now they are being beaten on most fronts (search, MP3 player, online advertising, HD-DVD) and their traditional revenue generating areas are taking a hit as more affordable and higher quality products are made available (Office, Windows, SQL Server).
The 360 is about middle of the road for them right now - they have a good customer base but poor hardware design. They are also charging them way to much for what they offer. You are correct - they could have easily won this console war but they have been screwing up a lot over the past year (the year before that it was Sony doing the dumb stuff).
FidliousWong @ Feb 24th 2008 7:39PM
*slaps hand against head*
This article makes it pretty cut and dry. If Microsoft is your publisher, this effects you. The advantage is MS is pushing for variety in XBLA and fronts the money and yes, even pays for several expenses which are really harsh for a developer of the indie variety. So MS publishing you costs more, but is worth more. However, if you want to go other routes with other companies, you will still retain 70%, there is just a higher up front cost.
This will likely not effect XBLA too greatly but it does make Sony's recent dev tool announcements more attractive. Either way, MS isn't going down just because Band of Bugs II is a PSN exclusive.
ScottyGEE32 @ Feb 24th 2008 7:50PM
hahaha BUT BAND OF BUGS 2 IS BETTER THAN HALO! I gotta get a ps3 now.
Crono (NDF - Knight of the Old School) @ Feb 25th 2008 11:10AM
I liked band of bugs better when it was called Final Fantasy Tactics.
Jayslacks @ Feb 24th 2008 7:48PM
Anyone who has ever done Freelancing knows that this stuff happens all the time. The big guys hit the little guy. That's not news.
Dracard @ Feb 24th 2008 8:33PM
It is for that one developer who THREATENED to leave XBLA and switch exclusively to PSN.
Just saying :3
nutman @ Feb 24th 2008 8:33PM
It sucks, but its not anything new. Really this isnt so bad compared to the stuff publishers usually do to small developers.
Wii60 @ Feb 24th 2008 8:38PM
Yeah, just hack it and homebrew. Makes a lot more sense than this.
Tiptup300 @ Feb 24th 2008 9:02PM
You do realize XNA is homebrew without the hacking...
DangerMouse @ Feb 24th 2008 9:11PM
Microsoft's controller logo looks like that fucking bird from Donkey Kong Country.
GRANTED @ Feb 25th 2008 9:48AM
the right side of the controller is his beak. yeah, i see that. someone get me a barrel let's ice this fucker.
DangerMouse @ Feb 25th 2008 10:40AM
thx 4 c'ing what i did there.
mike @ Feb 24th 2008 9:19PM
Once XNA goes live in the fall, These developers wont be making nearly as much money anymore anyway. Theres gonna be so many games coming out through XNA, free and pay games, that in order for a pay game to actually get a large chunk of sales like most releases do now they are gonna need to be something really spectacular.
For us non developers, this is all good for us because it will just mean more and better quality games on XBLA through XNA.
Killer @ Feb 24th 2008 9:20PM
Nice Microsoft. I see that you've figured that 95% of the arcade games must be selling more than you thought, so you make this happen. Then it looks like you're helping out even though you still make more money in the long run. Looks like the accountants at MS are working over time.
sleeptastic @ Feb 24th 2008 9:24PM
Lower profit, but lower entry costs. In otherwords, this news is actually good for new developers, but not so good for established developers. If you're a new developer, maybe you won't make as much money once the game comes out, but at least you can afford to make the game in the first place.
albinogoldfish @ Feb 24th 2008 10:49PM
Why all the hate, arcade was started as way to get small time developers a chance to get their game out on a current gen console without having to have a poly count that will end the world. To put it bluntly, if I don't have the money to deal with the paperwork to get things done but I have a great game, then this makes things easier. Seeing as I am a small time developer I like this. But I can totally see that if games are your HOBBY and not your JOB you can totally judge Microsoft for this decision.
XanthouS @ Feb 24th 2008 10:59PM
Yiff in hell.
Ban this asshat.
Slayer @ Feb 24th 2008 11:00PM
Someone ban this guy already.
ThornedVenom (Ludwig Defense Force) @ Feb 24th 2008 11:28PM
Judgment day is here!
The bots are taking over!
Curmeo @ Feb 25th 2008 1:41AM
the bottom line is, XBLA indie developers still end up making less money then before, which is the reason some are threatening to leave and join PSN instead.
shame on you M$ you greedy bastids.
Tridus @ Feb 25th 2008 9:00AM
Given that Microsoft is still charging $180 for a 120GB hard drive, why would anybody be surprised here?
They're really good at making money.
ZippyDSMlee @ Feb 25th 2008 11:17AM
MS is just doing this for the money, they get 5-$ a year for live and a cut off live sales what are not they not getting money from?
oh ya thos that boycott the POS system for its crappy hardware... *rolls eyes*
Joe Smith @ Feb 25th 2008 12:48PM
The incessant cry of "you greedy bastards" whenever MS does anything gets a little old.
Microsoft is a company that exists to make things that sell for money. If they don't sell for more than they cost to make, the company doesn't make money. And if they don't make money, they go bye-bye. That is how it works.
I would love to see you try to find someone who would invest several billion dollars in developing and marketing a console who isn't doing it for the money.
Ali @ Feb 26th 2008 12:23PM
It's funny how many people decree that MS are a bunch of bastards but aren't really game developers and don't know what the hell they're talking about.