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%.

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From The Chatty
  • reply
    February 25, 2008 12:54 PM

    That guy is wrong. Yes, publishers have always gotten the 70% deal, but so did developers that self published. Localization doesn't come close to account for the change in the rate. This is a move to basically force indies to make publisher deals IMO.

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      February 25, 2008 12:58 PM

      Yep, Jake Simpon who's post here( ) is basically dead on. It doesn't cost 35% of the cost of a project to do localization, testing and rating. Hell, all of that is a fixed cost and should be billed as such, not a percentage of lifetime sales.

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        February 25, 2008 1:05 PM

        Microsoft has a history of shooting itself in the foot when they are on the brink of doing well. Look at Windows ME and Microsoft Bob and any other number of flops.

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        February 25, 2008 1:27 PM

        I don't know how testing oculd be fixed rate (unless you don't mean QA) but it would make more sense if they made it a fixed cost ilke you say, or a percentage until a certain cap is met.

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          February 25, 2008 1:32 PM

          Testing is only done on a Cert attempt so make it $X per cert.

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            February 25, 2008 3:15 PM

            Uhm.. Incorrect. Nothing more to add, just.. flat out wrong. Testing for indie's is needed for a lot more than just the cert attempt. Most publishers handle their own QA. Not so for indie's. A game with no QA that went into cert the first time would never ever make it through the first day or likely even the 10th attempt. But you are paying for that QA one way or another. And Fayk is right. There really is no way to assign a fixed rate. If you can find a profitable business model for an outsourcing QA company that can charge a fixed rate for every single project that comes along, regardless of scope, let me know. I'll be your first investor.

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      February 25, 2008 1:57 PM

      who gets that 70% MS or the creator of the game?

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        February 25, 2008 2:24 PM

        It used to be the developer. Now only publishers get that deal.

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      February 25, 2008 2:41 PM

      I'm not defending Microsoft, but.. couple things to point out.

      This is a sliding scale.. It's not a firm 35%, from all the documents I've seen and people I've talked to. Have you after done cost analysis for a video game project? Do you have any idea what QA, localization, handling ratings, and otherwise prepping a game for world wide release costs? While it may not be 40% worth, it's also not an insignificant amount, and even more if you have to set it up yourself. It has accounted for a fairly large percentage of the budget on every game I've ever worked on, and that's using oursource sites that do it for a living, rather than going through the cost and expense of setting up your own group.

      There is a lot more going on here than just Microsoft making a cash grab. They're doing that too, but it's not nearly as simple as most people here seem intent on making it sound.

      In general, if you can't back up your assertions with hard data "Localization doesn't come close to account for the change in the rate", save yourself some embarrassment and don't say it. I have tremendous respect for Jake Simpson, but the project he works on is also a little different from most, so their costs and project setups don't exactly map to 99% of the other game development teams out there.

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