Microsoft takes aim at Steam, decreasing online store cut by more than half

Microsoft is looking to shake up the gaming industry once again, this time by drastically decreasing the cut they make from Windows store sales. Steam, take note.

Microsoft have a long history of undercutting their competition and reaping the benefits later down the line. Their Game Pass subscription service, which provides a library of titles for a monthly fee, is changing the way people buy and play video games. It has already won them numerous new fans and supporters, and has put some serious pressure on industry leader Sony.

Their recently announced strategic decision to decrease the cut they make on their electronic Windows store could well have a similarly profound effect on the industry. Microsoft stated they will be decreasing their cut to 12% of sales.

Currently, Valve take a 30% cut of all sales that take place on their online Steam store. This has drawn scorn from various directions, particularly smaller video game developers that struggle to cover their production costs.

In a recent GDC survey of over 4,000 video game developers, only 7% responded that they thought 30% or higher was a justifiable percentage for Steam to take for themselves. Microsoft’s proposed cut of the action fits smack-bang in the middle of what a majority of responders felt was fair.

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Screenshot: 2020 State of the Industry Report GDC / Informa Tech

This decision to align themselves with developers is interesting to say the least, although immediately declaring Microsoft virtuous saviours is probably a bit premature. Businesses will often undercut their competition in an attempt to win new customers, only to later increase their prices. It’s a strategy Microsoft is undoubtedly familiar with.

It should also be noted that Microsoft has so far struggled to convince many developers to even bother listing their games on their Windows store platform, so this move could be perceived as a seduction of sorts.

Nonetheless, by providing strong competition to Steam, the video game industry is likely to benefit in numerous ways – customers should see more competitive pricing and developers will be given more than one realistic option in terms of selling their game online.

The way that this renewed focus on Microsoft’s Windows store relates to Game Pass and Xbox Game Bar remains unclear. However, there is an obvious disconnect between the services’ different approaches to gaming; with one encouraging purchases and the other subscriptions.