Microsoft, the Console Financial Model, and Independent Games

Microsoft usually isn't seen as a harbinger of innovation, a generous company, or a company that would shake up the status quo.

However, lately Microsoft has been talking about the uses for the Xbox Live Marketplace, and one of those uses includes a distribution system for independent game content. It's yet to be seen what that means, and what sort of licensing restrictions independent studios have to conform to, but it's a very interesting and very promising idea.

Promotion and distribution have historically been one of the areas in which independent games have been weak. A channel where dedicated gamers can easily see offerings, purchase them, and have them "delivered" almost-instantly obviously does a great deal to alleviate those issues. And development should be easy, too: independent games are usually developed for PC, because of the ease of programming, availability of libraries, and easy access to development hardware. While studios probably won't find it any easier to get Xbox dev kits, thanks to Microsoft's XNA initiative, the DirectX API should be substantially similar on both the PC and the Xbox.

So why is Microsoft interested in helping indy developers? Well, it's not necessarily a question of helping as it is "not hindering". Most console game companies, past and present, have not been thrilled about unlicensed development for their console. There's talk about upholding the "quality level" of the platform, and giving users a consistent experience, but the main reason is money. Console makers make money by licensing the right to develop games for their hardware, and every game that isn't made with a license agreement, no matter how spectacular, is not doing the console maker any good. If you buy a current-generation Xbox, and then buy no games, Microsoft is actually worse off than if you hadn't spent any money at all. Even Nintendo, which makes money on each console sold, still makes the lion's share of their income through licensing.

So why is Microsoft (possibly) letting unlicensed developers make games for their system? Because they're not necessarily trying to make money selling game licenses, like everyone else. They've said from the beginning that Xbox is a trojan horse, aimed at getting Microsoft stuff into the living room. They're willing to sacrifice some potential profit in order to make their platform more appealing to people. Plus, even if they're not getting dev kit license fees from these developers, they're certainly getting a cut of every sale via Live Marketplace, and they're getting Live subscription fees as well. The only risk they're running is that independent games might cannibalize sales of 3rd-party games, and that's not very likely.

Microsoft's entire OS business rests on making a platform that's open to anyone to develop on. They'll happily collect developer fees if you want to join MSDN, but they'll just as happily let you run a homebrew program compiled with GCC. They don't make money by restricting the platform, in fact the opposite is true. The more apps that run on Windows, the more people want to run Windows. They'll even give you free DirectX SDKs, developer tools, and almost everything you need to write a Windows game, because that's not how they make their money.

I think they're taking a similar approach to the console world, and if it helps to make a market for independent games, I'm very glad.