Rumor: Microsoft cutting royalty fees for XBLA games?

This week was all about the democratising of Indie game development through the PC, PSN and XBLA. But according to Brian Crecente over at Kotaku, Microsoft may be getting a little greedy on the current XBLA royalty fees - claiming they may have as much as halved the previous amount given to developers.

For the last few years Microsoft had given XBLA developers a very generous royalty share of 70% - now sources are saying that may have gone down to somewhere near 35%.

Microsoft has responded to the allegations, which you can view here on Kotaku, however they neither confirm or deny the rumor.

If the rumors are true - it seems like an almost hostile move by Microsoft which could possibly push waves through the Indie community back to the PC, PSN or Wii. One of the main reasons XBLA is so popular is that it's actually one of the few ways to make some decent cash out there in the Indie scene - a scene where most games are made out there for no profits whatsoever, and a scene where games are - in general - never actually made to completion.

If such a sudden change has occurred, it may begin to turn people off using the XNA library. A game like The Dishwasher is already fairly far along in development - but what can a developer like this do now that they're already deep into the XNA structure? You can't go back - you're committed to the platform. You're stuck.

If this is true it could also mean that some games could go UP in price - a game like Bionic Commando Rearmed was made with a fairly large budget for an XBLA game - under the assumption that they would get most of those costs back with the generous royalties - now it might be too much of an effort to do this kind of project again.

Of course, this is all speculative, it might just purely be rumors, or not as severe as suggested - but even still it could be a blow to the XBLA initiative. At the same time, we don't know what sort of royalties are being pushed by Sony or Nintendo on their respective consoles either.

Kotaku will hopefully be following up on this as more information comes up.

Source: Kotaku - "Rumor Microsoft Cuts Indie Royalties in Half", Kotaku - "gdc08 Microsoft Responds to Royalties Cut Rumor"