Digital 'store wars' break out as Microsoft Store commission is cut to five per cent

Digital download 'store wars' hots up as Microsoft tries to reinvigorate moribund Microsoft Store

A price war among online software download stores has broken out, with Microsoft finally slashing its commission for developers selling apps via the Windows Store to as low as five per cent.

The commission cut - originally trailed at Microsoft's Build 2018 developer event last year - is part of a shake-up of the currently somewhat moribund Windows Store, but the company will still retain a 30 per cent commission for all PC and Xbox games, as well as any in-app purchases.

The complicated way in which Microsoft has chosen to structure its charges, though, may put off as many developers as it attracts: Microsoft is cutting to 15 per cent its sales commission for non-game apps for both PC and Xbox, but this will be cut to just five per cent if a customer is delivered via a ‘deep link'.

Microsoft's digital store commission cuts come just three months after Epic Software cut commissions on its newly launched games download portal to 12 per cent, compared to an industry standard 30 per cent.

While games aren't included in the commission cuts - as Microsoft does not want to undermine its Xbox console revenue streams - it will nevertheless heap further pressure on Valve Software, which runs the popular Steam games portal.

In a bid to persuade developers to shift their wares from Steam to Epic Games, Epic also removed the five per cent commission it demands for use of the Unreal Engine by developers - pushing the effective commission many developers have to fork-over for selling games over Steam to 35 per cent.

In response to the announcement of the Epic Store Valve restructured its commission structure to reduce commission on big-selling titles from 30 per cent to 25 per cent. It hasn't, however, budged further since then.

Microsoft has no doubt been moved to slash commission in a bid to drum up interest in its app store. Despite being built-in to the Windows 10 operating system (and Windows 8 before that) it has remained largely moribund, with users preferring to use either independent stores, or developers making popular titles available to customers directly.

Epic Games launched its app store on the back of the popularity of Fortnite, the free-to-play Battle Royale game, which the company has ported from PC to console and mobile.

The 30 per cent standard commission demanded by app stores from developers was established just over ten years ago with the rise of smartphones and their tied app stores.

While welcome at the time for making digital distribution easier, as well as cutting costs and business risks compared to physical distribution, it has become increasingly anachronistic as digital distribution of software has become the norm.