One of the key announcements made during Microsoft’s Build 2018 conference was that they might change up their revenue structure just to appeal app developers. This initiative is made targeting Microsoft Store, the app flagship at Microsoft where users find and download verified apps. It is also a great platform for developers to reach a bigger audience with a prospect for new users and customers. The revenue structure will apply to apps for Windows 10, Windows 8.x, Windows Mixed Reality, Windows Phone, and Surface Hub.
A new way for developers to monetize
Microsoft believes that this will help them get more enthusiastic developers who will create and design better apps and grow a thriving business as a developer. It will be a new way to monetize their skills. There are rules to how the revenue will be distributed depending on a contractual developer agreement which will be available by the end of this year.
A better revenue share for developers
Developers of consumer apps will now receive 95% of revenue share from app downloads. if the app is deep-linked externally from
other sources. If developers gain users and customers through marketing or from any of Microsoft’s services or owned properties, the
company will switch the revenue share to 85%. This will be beneficial for developers who will earn 15% more from the current 70% policy, for their self-created apps.
This new revenue model is only available on consumer apps and not on games
Microsoft currently collects 30 percent of revenues from apps and in-app purchases. This is a major change in its revenue policy. The reason could be that Microsoft store in Windows has been struggling to appeal to developers for quite some time now. This appears to have forced the tech company to make rational changes in its revenue policy.
This change has also set Microsoft to compete with Google and Apple. Both Google and Apple offer similar shares to the developers of their respective app stores. Google is 85:15, but it is only applicable developers can retain users for a minimum of 12 months or 1 year. Similarly, Apple distributes revenue 70:30 with developers for the first 12 months of subscribing to an app.
While Apple and Google both structure their revenue sharing models based on how long a user is engaging with an app, Microsoft’s new standard revenue model of 95:5 is much more appealing and will be beneficial for Microsoft in the long run.
We will have to now see how Microsoft succeeds with this new policy change.