Xbox Live Arcade: Screwing the Little Guy

What began as a passive experiment with some old arcade classics on the original Xbox has been reborn as one of the gaming industry’s premier marketplaces. It seems like such a long time ago when the Xbox Live Arcade re-launched with the Xbox 360. In fact, it’s been a little over two and a half years ago since the original Geometry Wars graced our hard drives. So much has changed since then. Digital distribution on the 360 was hailed as a savior for the small time developers—a method of cutting the tether between big budgets and big ideas. Small projects or risky artistic games that had no chance of making it to retail (a market dominated by photo-realistic sequels and promotional tie-ins) could be made available to the public for cheap via download. In this way, small teams could produce games within their means and have a cheap means to get their games to the public without having to go through the system of retail publishers which take a massive chunk of the profits for their services (marketing, distribution, manufacturing, and so on) and have a history of turning down even the most sure fire of hits (such as Sierra’s Ghostbusters…Activision, what the hell were you thinking?).

But instead of actually honoring that commitment to small-time developers, Xbox Live Arcade has divulged into a miniature version of the retail market—a service that caters to the large publishers and squishes out the small developers who haven’t the manpower or financial backing to compete. Ever notice that the service’s biggest hits are all coming from studios owned or represented by larger publishers? Prince of Persia (Ubisoft), Geometry Wars (Activision), TMNT Arcade (Konami/Digital Eclipse), Galaga Legions (Namco), and so on. What happened to the developer friendly service that was meant to expose all of those undiscovered Miyamoto’s out there?

Well, one of those budding geniuses just exposed himself with the release of Braid–a brilliant time bending puzzle platformer in the vein of Donkey Kong 94 but with a style and flair rivaled by few. If you haven’t bought this masterpiece yet, shame on you! The whole thing was created by one man, namely Jonathan Blow, former author of the Inner Product column for Game Developer Magazine and host of the Experimental Gameplay Workshop at the annual Game Developer’s Conference. Braid is the purist definition of an “indie game” and has fortunately gotten a lot of recognition due to positive word of mouth among gamers and press. Too bad that it doesn’t look as though Jonathan will rake in the massive profits from the game that he deserves. Why, you ask? Probably because he has little room for negotiation with Microsoft Game Studios as his publisher and because Microsoft enjoys screwing over the little guy.

It’s funny how bold originality and creativity are rarely rewarded in our industry…even when the gamers are on board.

Developers who are working on XBLA projects seem to be treated one of two ways. If you’ve got publisher backing, Microsoft will be more willing to negotiate such things as royalty rates, or even bend some of the countless certification hurdles such as was the case with Capcom (Super Street Fighter II Turbo HD) and Konami (Castlevania: Symphony of the Night) when their games were too large for the (ridiculously small) XBLA file size limit. If you don’t have publisher backing, and likewise represent yourself in the face of Microsoft, prepare to fork up a massive percentage of your profits with little to no leverage for a better deal. Publisher backed developers can probably expect to keep around 70% of their profits from a single project, but royalties from an independent game can possibly drop as low as 40% in the worst circumstances. If an independent developer can manage to keep their 70%, Microsoft has a back door approach to choke their bottom line. Microsoft can choose at their discretion to “market” (the extent of this marketing goes unsaid) any XBLA title and take an additional 30% cut of the profits for the duration of said marketing period. Most XBLA games sell the mass majority of their units during the first week of availability with a trickle down period of sales following thereafter. How convenient for Microsoft that most of these profit eating marketing periods occur during the first week of a game’s availability. Some foreign XBLA developers (Europe especially, because the Euro is now much stronger than the dollar) don’t even realize that they are getting screwed by Microsoft on the point-to-dollar exchange rate. Some developers are actually losing money because they aren’t making back what they put into the project thanks to Microsoft’s dubious tactics.

This entire process exists to basically nickel and dime every possible drop of profit from the independent developers who need it the most and reinforce the idea that Microsoft looks at independent developers more as common laborers than creative partners. This bullying by Microsoft keeps the smaller developers in line. They slave away and create hits for the Xbox 360, but barely scrape by financially because Microsoft is eating their profits. This stifles any room for growth, and that’s if they even manage to break even. It’s also more likely to drive them to join a larger team, Microsoft friendly major publisher for the sake of financial security—or perhaps even Microsoft, who is always in need of good in-house first party game makers. It sure makes for an underhanded way to go about recruiting talent. Microsoft’s upcoming XBLA Community Games service seemed like a better alternative for developers with fewer restrictions and certification hurdles, but already that service is showing itself to be even more bogged down with lower royalty rates and absurdly low price caps designed to keep indie developers starving.

You know things are bad when it costs many indie game developers less to produce a decent DS title for retail than to develop your standard Xbox Live Arcade game for digital download. Microsoft puts a lot of lip service into talking about indie games and how they will drive creativity in the future, but they really don’t mean it. New blood means new ideas, and new ideas mean the disruption of the established pattern. A long time ago Hollywood studios began the process of buying out national movie theater chains to block independent films from getting shown on any screens. That way, we the public only have access to the same old formulaic crap the studios put out every year and never realize there might be something better. Something similar is now happening in gaming. Microsoft likes the established pattern and is taking a similar route with reigning in independent games. They can be as independent as they want—as long as they’re under Microsoft’s foot. That isn’t good for the health of our hobby. Change is vital, and the core gamer market has been stuck in a creativity rut for eons. To get change, we need a steady stream of new talent, and some of the best new talent is coming from everyday people just like you and me.

With the way Microsoft so dubiously controls their current download model, no wonder they so gleefully look forward to a future where digital distribution allows them to control every facet of the only distribution channel for their games. That’s not a future I look forward to.

Like this article? Please Digg it!

digg_url = ‘http://digg.com/xbox/How_XBLA_is_Screwing_the_Little_Guy’;