Microsoft to give royalty breaks to next gen developers...

[Fats]

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.

We contacted Microsoft for comment this morning and were met with the disappointing, but inevitable "We don't comment on Next Gen rumours or speculation". When we have more on this story, so shall you.

www.computerandvideogames.com

[xbdestroya]

Dude, Microsoft is really pulling out all the stops. This move has to get them something, I guess the question will be what and how much.

I would be willing to put a lot of money on the table though that SquareEnix is the dev being offered $0 royalty charges though.

[Fats]

I wonder how Sony will react, they surely have to be worrying slightly now.

[Z]

I wonder how Sony will react, they surely have to be worrying slightly now.
Why? How do you know if Sony or Ninty aren’t doing something as well?

When development for PS2 games began, Sony made licensing fees for PS2 cheaper than PSOne. I do not know if that lasted or was a timed offer, but it shows that Sony’s good marketing skills. You need to keep in mind that Sony is one of the best in the world in marketing- if not the best.

This move by MS explaines the interest of Japanese devs. If you notice, nearly all announce Jap devs for X2 are from brand new small studios. So these kinds of deals suits them best. Look at those studios like MistWalker and the like, they haven’t released a single title. They have small staff. The are on the look for these kinds of deals.

In any case, these moves are normal, especially for a new platform. There is nothing new here.

[Fats]

I understand what you're saying Z, we don't know what Sony are doing. But I'm just looking at this with Microsoft in mind and not considering what Sony could be doing.

Why would Sony not be worrying now? Well for a start, this is a huge incentive to gain more well-respected developers to the X-box 2 platform. This would therefore increase the chance of Microsoft gaining key exclusives (a) because of the royalty reduced/free situation and (b) the fact that Microsoft have a lot of money to throw at game developers to presuade them into making exclusives.

You mention that Sony made the licensing fees cheaper for developers, but did they offer no per disk royalty for some developers? Given the fact that Microsoft have also gained some respected talent as well AND the high posibility that the X-box 2 is to be released this Christmas it's VERY clear that Sony aren't going to have it easy this time round.

[The_One]

Given the fact that Microsoft have also gained some respected talent as well AND the high posibility that the X-box 2 is to be released this Christmas it's VERY clear that Sony aren't going to have it easy this time round.Indeed. Sony doesn't have the advantage of releasing first this time around, and with many Jap devs (albeit small, like Mistwalker) jumping on the X2 bandwagon, Sony doesn't exactly have its home field advantage either.

I'm having doubts on the success of the PS3... But alas, if history has proven anything, Sony almost always pulls through (Minus Beta Max :lol:).

[stanDarsh]

If my memory serves me correctly PS2 was not the first console to launch this generation it was Dreamcast. So many could argue Dreamcast had 1 year advantage over PS2. Not taken anything away from Dreamcast it was an awesome console, it just didnt have the same anticipation as PS2.

If history repeats itself, more people will be anticipating PS3 than XBox2, if this is correct, then I believe PS3 will come out the winner of its 3rd consecutive console war.

That said I still believe Nintendo is the dark horse in the next gen war, and who knows exactly what they will bring to the table, all in all its gonna be an awesome time for gamers.

[Chris Metal]

But surely if the Xenon won't be backwards compatable, as it's be rumoured, this will be a huge kick in the gut to them. A lot of X-Box owners won't be able to play their old games on the new console. If Xenon fails in this area I think they will lose a lot of fans, still they'll gain some brand new ones no doubt. Not a lot of gamers want to keep two console's from one company for one purpose and the other for a different one. Not everypone has the space.

[xbdestroya]

I agree that lack of B/C could really hurt the Xenon with some fans - especially if Microsoft is indeed scaling back on the XBox itself.

I myself am pretty impressed with Microsofts willingness to cut these kinds of scorched-earth deals, just because the potential for even greater losses exists for the first couple of years this way. I think PS3's greatest defense against this in Japan, and we'll see how it plays out, will be that a lot of developers, whether they are offered this incentive or not, may prefer to just stick with PS anyway since they know they will sell a lot more units that way. I mean, ~$5 more per game isn't much if you sell less than 1/10 the games you would have originally.

XBox 2's success in Japan will be a definite chicken before the egg type situation. If one thing suddenly begins building momentum for Microsoft in Japan, the rest might soon follow. Likewise if one thing decides to hold back, it could bog the rest down for them.

[Domination]

I agree with a lot of you.

Many may have thought otherwise, but backwards compatibility is an issue. The Xenon is very much likely to launch later this year, and a lot of gamers are holding off on a second console in preparation for the next. For those who either skipped whatever console this gen or traded in their console very early in its life cycle for something else because they wasn't please at the time could very well be those gamers looking to repurchase the console all over again. If they are force to by the new and old console just to play the required games available, Microsoft could be in trouble. IMO, they need this to expand their fanbase, esspecially if they plan on pull the plug on the Xbox console.

[Z]

Sony doesn't have the advantage of releasing first this time around



releasing first or last both has its advantages and disadvantages. I still think PS3 will be the market leader again just on its current crazy success. PS2 has sold more than Xbox and Cube combined and doubled!
Here is what I think about PS3 releasing the last:
Consoles do not release annually. So after these three are launched, no one knows when the next gen will come out. Certainly these new system have the potential to last longer than there predecessors. By all that and more the excitement about next-gen is overwhelming. X2 and Rev(as I expect Ninty to release it ‘just’ before PS3) will get people very excited- these are the next gen after all. So everybody will get a taste of the new era. Now, everybody will be saying “if this greatness are from these systems, how will the last, and most powerful, one is released?!” add to that that this systems is non other than the successor to the worlds favorite and market leader since its first depot in the last two generations: The PS3. so X2 and Rev will be exciting people, hyping them and pumping them on PS3. and whether that hype is just hype or has solid grounds is not the point. The point is people around the world will have the notion carved in there brain.
keep in mind that Xbox is a finacial disaster. Cube is doing ok at best, and PS2 is responsible to 53% of Sony's revenue!

Look at it this way; this time, the best seller and No.1 choice is not only here, it is the most powerfull as well.
Ninty can get some people excited about anything they will show, even if it was a toaster, by showing a Zelda and a Mario trailer. Think what could Sony do by showing:
Design
Style
Concept
THE Biggest Exclusive Favorites, Period
Cell
BD
Grid
And the rest.

Showing a trailer of GT, Tekken, FF, MGS, etc. is enough to turn everyone into zombies- they will forget everything else at that moment.


E3 is 43 days to go and counting!!

[Omega Blue]

Sony doesn't have the advantage of releasing first this time around

Its been 5+ years since the Ps2 was released AFTER the Dreamcast and some folks (that are low on the IQ food chain) still can't see that Sony wasn't the first to release their console. They were second, S-E-C-O-N-D, as in AFTER first. Why do people say they were first? because they stomped the living sh*t out of DC on "Marketing" alone and people didn't even want to Acknowledge DC and Sega anymore as being the first Next-gen console to have been released. Also if you notice the quote

"for a select few there is no per disk royalty"

"Select few", i think only a Select Few of us (IE Z and I maybe a few others) here at Psinext still have functioning brains.

What does this quote mean? That for all we know that "select few" are companies publishing through them, or are owned by them, either/or. Thats not a very big number, nore is it enough to get all "ZOMFG SONEE IS GUNNA GETZ DAHPWNED!!!"

Congrats people, for not reading the fine print, good luck on any type of career involving contracts.

[Domination]

Its been 5+ years since the Ps2 was released AFTER the Dreamcast and some folks (that are low on the IQ food chain) still can't see that Sony wasn't the first to release their console. They were second, S-E-C-O-N-D, as in AFTER first. Why do people say they were first? because they stomped the living sh*t out of DC on "Marketing" alone and people didn't even want to Acknowledge DC and Sega anymore as being the first Next-gen console to have been released. Also if you notice the quote

Maybe they meant first to Microsoft even though I agree that this never worked for neither Nintendo or Sega. Basically, I see it as an excuse, esspecially those who can't justify real success when they see it.

[The_One]

Indeed, I meant releasing first as in before Microsoft... On top of that, DC wasn't even a competition for the PS2 before SEGA hit the dirt :lol:.

[Mordecaii]

Just curious, but does anyone else find this news a little suspect since it came out on... APRIL 1ST????????

[The_One]

Just curious, but does anyone else find this news a little suspect since it came out on... APRIL 1ST???????? Yes, I thought about that, but it seems very legit, and it's also from computer and videogames.com, so I think it's not a April Fools prank.

[Z]

now, this is quite normal really. It is done all the time, and not just in the gaming industry.

Note that licensing fees are the main revenue source for game consoles, so such policies will never be widely used or for long periods of time.
And in some occasions, a maker can begin to make a profit out of the console sales directly like in the case with FamiCom, PS1&2 and GBA.