In Microsoft's ecosystem of building an app store around a PC or mobile phone, the Xbox Store has always been a separate existence. Like Apple's App Store, Microsoft takes a 30% commission charge for games distributed through the Xbox Store. In Epic Games' lawsuit against Apple last year, Microsoft also defended the business model. But now Microsoft is hinting that the Xbox Store will be more open, and it will completely change the business model of xbox consoles in the future.
In a series of Xbox Store policy tweaks announced today, Microsoft President Brad Smith said the policies are designed to "ensure we provide the best possible experience for creators and customers of all sizes." However, some of these policies only apply to the Microsoft Store, not the Xbox Store.
Microsoft has previously revealed that it can't make any profits just by selling Xbox game consoles, because the company adopts a hardware subsidy model, which generates profits through game sales and online service subscriptions. This mode is especially lucrative for free-to-play games like Fortnite, Call of Duty: Warzone, and other popular free-to-play games that rely on in-game purchases to monetize. Microsoft took a cut from all of these purchases, and we've seen the impact Fortnite has had on Xbox revenue.
While the business model is lucrative, Microsoft says it will need to change because it will reassure regulators that are closely watching its $68.7 billion acquisition of Activision Blizzard. Smith admits: "We recognize that even for stores on Xbox consoles, we need to adjust our business model." Today, Microsoft will apply 7 of its 11 policies to the Xbox Store, including equal treatment of apps or games, transparency in the promotion or marketing of apps and games, and the same standards for other apps or games as it does for its own apps or games.
