As Valve's digital games distribution platform, Steam, continues to dominate the PC market, Microsoft has announced that it's cutting the revenue share for developers who list their games on the Microsoft Store by more than half. As a result, going forward, the Microsoft Store's profit margin will now match that of one of its main competitors, the Epic Games Store.
Will Reducing The Revenue Cut from Thirty to Twelve Percent Be Enough?
Despite its best efforts, Microsoft doesn't even come close to threatening Valve's hold on the PC gaming market. However, that doesn't that Microsoft is about to give up just yet. The software giant's most recent move, which is to lower its cut from 30 percent to 12 percent starting on August 1, might just entice more studios and developers to list their games on the Microsoft Store.
Xbox Game Studios Head Matt Booty made the change in revenue cut official with a post on Xbox Wire, where he also talked about Halo Infinite.
Just to be clear, the change in revenue share will affect only PC games listed on the Microsoft Store. It will not affect the Xbox games sold on the same store. Although Microsoft didn't explain why this was the case, it's highly likely due to the difference in the business model between PCs and consoles. Typically, console manufacturers like Microsoft ask for a 30 percent cut on software sales in return for free marketing.
It remains to be seen if Microsoft's latest efforts will be enough to make the Microsoft Store a more popular alternative to Steam. Most likely, Microsoft will need to do more.
Case in point, the Epic Games Store still lags way behind Steam in terms of market share. Depending on how recent the statistics you're looking at are, Steam either has anywhere between 50% up to 90% market share of all digital PC sales. In addition to this, Steam peaked with a concurrent player count of nearly 25 million in December 2020. Steam also sees more than 120 million active users every month.
With that said, Microsoft reducing their price cut on all PC game sales by more than half is a significant change. It also matches Epic Games' price cut. In comparison, Valve still follows a sliding scale for their revenue share on games listed on Steam. Their cut starts at 30 percent. This goes down to 25 percent as soon as a game hits $10 million sales and 20 percent once the game hits the $50 million milestone.
While Epic Games and Microsoft are eyeing Steam, Valve is setting their sights on something arguably grander. Valve recently rebranded their regular games showcase, now naming it Steam Next Fest, with a schedule that puts it in direct competition with E3 2021.