Microsoft Gives Royalty Breaks To Next Gen Developers

[skorp]

Senior publishing and development sources leak news that Microsoft has cut its 'per disk' royalty to attract and secure platform-exclusive next gen content.

This morning we were simultaneously shocked and impressed to learn that the house that Gates built has been courting next-gen capable developers and publishers to exclusively create content for Xbox 360, by massively knocking down the cost of the company's per-disk publishing royalty, with one anonymous senior publishing source stating "for a select few there is no per disk royalty". Stunning if true.
If our sources our indeed correct (and these particular ones usually are), this could mean that the financially fortunate company will again operate (for an unknown time) at a financial loss, with the assumed reward being an increased market share through exclusive hosting of as much of the top Next Gen content around as possible. This would also prove to be a double-edged sword, as it would likely limit Japanese rival Sony's options for its upcoming PS3 console.

Just to clarify, Microsoft originally operated - with intention - at a huge loss, by selling its Xbox consoles for less money then the company was making them for - reportedly over 100 notes were lost per console. As a result, the company could sell the console at an affordable price and gain the market share it intended to.
Now it looks like the Redmond Giant is to use a similar strategy, though this time directly aimed at content providers and publishers, through offering a highly tempting reduced per-disk cost deal. Format holders are said to make rather healthy amounts of cash from charging publishers a royalty fee per printed disk - just shy of a tenner per disk last we checked - meaning that even if the game doesn't sell when on a store shelf, the format holder still makes money.

If Microsoft is indeed cutting this figure down and in one apparent case we heard, waiving it completely, then the publisher's risk is reduced massively (that could mean more interesting and original games getting signed kids). In light of current fears that Next Gen games will cost in the double millions, this becomes a very attractive proposition indeed for publishers, and one Sony may have to match (that is if it isn't matching it already) in order to attract future blockbusters.

[EDIT: SOURCE ]