Rumor: Indie XBLA Devs Face Royalty Cut

Following rumors that Microsoft has slashed independent XBLA royalty rates across the board, GameSetWatch is reporting that Microsoft recently implemented a sliding scale which generally reduces royalty rates for independent XBLA developers.

"If you had a 70% deal... for a game, then you'll get your 70% for the life of the product," said XBLA developer Paul Johnson. "There is now a sliding scale in place for royalty payouts that is sure enough less than 70% at its best, but I've always thought that 70% to be unsustainably high from the get go, not that I was going to complain about it."

Rumors began circulating last week that Microsoft had cut royalty rates for independent developers—that is, developers who submit their Xbox Live Arcade titles directly to Microsoft—from 70% to 35%. GSW's Simon Carless explained that the significant drop in dollars accounts for localization services, normally handled by a publisher.

"If you're an indie and you have to go through a third-party, you will be getting a percentage of a percentage, because Microsoft takes a cut, and then your publisher, and then you," Carless wrote. "But you don't have to worry about testing, localization, getting ratings, and so on."

Royalty rates for independent developers working with third-party publishers are significantly higher at around 70%.