Microsoft ups the ante against Valve by offering more money to PC game developers

(Microsoft image)

Microsoft will increase the share of net revenue for game developers from the Microsoft Store in a challenge to Valve.

Starting on August 1, game developers who publish their titles via the Microsoft Store will receive 88% of the net revenue from sales, up from 70%.

“Having a clear, no-strings-attached revenue share means developers can bring more games to more players and find greater commercial success from doing so,” Microsoft CVP Sarah Bond wrote on LinkedIn.

This can be readily interpreted as a shot across the bow to Valve Software’s Steam, the leading digital storefront for PC games. Developers who sell games on Steam receive 70% of their sales revenue below $10 million, with 30% of that going to Steam.

That 70/30 revenue split was once the industry standard, but several of Steam’s competitors, such as Humble, Discord, and the Epic Games Store, have used that as a point of attack by offering developers a more favorable deal.

Once it’s adjusted its terms, the Microsoft Store’s 88/12 model will offer a deal to developers that’s on par with Epic. This leaves GOG.com and Steam as the only major digital storefronts that are still using the 70/30 split, and in theory, will make the Microsoft Store a more attractive option for third-party developers and indies.

Despite Xbox shortages, Microsoft reports $3.6B in Q3 gaming revenue, 232% growth in hardware sales

Only 3% of the 3,000 game industry professionals polled in a new survey from the Game Developers Conference were satisfied with the 70/30 model for digital game sales, which is significantly down from 27% in last year’s survey.

(On top of that, indie developer Wolfire Games filed a class-action lawsuit against Steam on Tuesday, accusing Valve of anticompetitive practices and demanding a jury trial. It’s been a rough week for Valve.)

Other announcements from Microsoft today include its continued focus on, as it puts it, “building communities around games, not devices.” Halo Infinite will support full crossplay between its PC and Xbox versions on launch, which is still scheduled for an indeterminate point later this year. If you’re on PC and your buddy’s on Xbox, you’ll still be able to play with or against one another in Infinite.

It’s also planned to feature cross-progression. If you switch between platforms on Infinite, you’ll be able to pick up right where you left off, bringing both your place in the story campaign and your multiplayer customization with you.

The audience for Halo is apparently still there. Microsoft launched the series compilation The Master Chief Collection on the PC version of the Xbox Game Pass at the end of 2019, which has attracted an audience of more than 10 million players, many of whom were brand-new to Halo.

The same community emphasis has driven Microsoft’s recent first-party releases on Steam, including Sea of Thieves and Microsoft Flight Simulator, with Age of Empires IV planned for release on Steam later this year.

Microsoft has been pursuing an odd, counterintuitive strategy with its gaming division in this generation of hardware. Instead of putting its emphasis on system exclusives, which has been the accepted tactic in the last 20 years’ worth of console wars, Microsoft’s emphasis has instead been on making it easier and cheaper to play games on its platform. So far, it seems to be paying off.