Microsoft plans to lower its Xbox store to just 12 percent, according to confidential documents filed in the Epic Games vs. Apple case. The software maker provides details about the store costs and changes to a January document, where it also lists the 12 percent discount on PC games it announced this week. While most of the key parts of the document have been redacted, one page reveals that Microsoft is also looking to cut its 30 percent store cut on the Xbox console side.
A table shows that “all games in CY21 go to 88/12,” meaning that Microsoft planned a significant cut in Xbox transactions for some point in the 2021 calendar year. Although Microsoft has announced its PC cut, which is also listed in the same table, the company has remained silent on any Xbox plans. A change to 12 percent would be significant, especially since Microsoft, Sony and Nintendo all currently account for 30 percent of digital game sales.
“We have no plans at this time to change the revenue share for console games,” a Microsoft spokesperson said in a statement. The edge about these documents. That suggests these plans have failed, changed significantly since January, or Microsoft isn’t ready to announce changes just yet. Regardless, Microsoft has clearly planned this change and wants to somehow cut its Xbox costs.
This document is part of the Epic Games vs. Apple trial starting Monday, and there may be questions about Microsoft’s reimbursement plans here. Both Epic and Apple will appeal to Microsoft’s Lori Wright, VP of Xbox Business Development, next week as a third party witness.
The documents also show that Microsoft intended to apply this lower retail rate on the PC side, with one important caveat. “There is currently a proposal currently under consideration by Gaming Leadership Team to adopt 88/12 as revenue share for public PC games all games in exchange for the grant of streaming rights to Microsoft, ”the document reveals. We asked Microsoft if this proposal went through, but the company declined to comment in time for publication. Microsoft plans to cut its share of PC game revenues to 12 percent by August, but it’s not clear whether the streaming rights clause is still included.
As we noted yesterday, Microsoft has been quietly backing Epic Games’ action against Apple. Microsoft has previously defended its 30 percent cut in sales of Xbox digital games, and Epic Games has been happy to keep it in place. “Game consoles are specialized devices optimized for a particular use”, said Rima Alaily, deputy general counsel at Microsoft, last year.
Alaily argues that “the business model for game consoles is very different from the ecosystem around PCs or phones,” because Microsoft subsidizes the hardware and consoles are “vastly outnumbered by PCs and phones.” An Epic Games executive also revealed in a court statement this week that the company has never attempted to negotiate with Microsoft to prevent its commerce engine from being used on Xbox. Despite defending its Xbox cut, Microsoft admitted last year that the company “has more work to do to establish the right set of principles for game consoles.”
Elsewhere, another confidential document sheds light on Xbox gaming exclusivity. STALKER 2 is listed with a three-month console exclusivity deal, Tetris effect: connected with six months of exclusivity on connected updates, and The gunk with perpetual Xbox exclusivity.