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From C|Net:

Microsoft is looking to squeeze a profit out of the gaming market with a new royalty program tied to the release of its next Xbox console.

Only accessory makers that get Microsoft's blessing and fork over a slice of their sales to the software maker will be able to produce Xbox 360 game pads, steering wheels, joysticks and other controllers.

In addition, in order to ensure that only authorized products connect to the new console, Microsoft is adding a security mechanism that will be available exclusively to those who sign a deal with the company. The Xbox 360 console, announced in May, is slated to go on sale this holiday season.

With the last Xbox release, Microsoft had a licensing program in which makers of such gadgets could either pay a royalty and display an Xbox logo, or offer the products without paying the fee or using the logo.

The new royalty program could be part of Microsoft's goal of turning a profit with Xbox 360, something the company was not able to do with the prior generation console, said IDC analyst Schelley Olhava.

"Microsoft has made it very clear that it's all about profitability" with this generation of console, Olhava said. "Maybe this is a way they are looking to make additional revenue off of the Xbox." But, she said, the move could also be intended as "a way to ensure quality products make it out the door," reasoning that makers willing to pony up a share of the proceeds would be the kind of companies that make more reliable gear.

Microsoft declined to comment on the royalty structure for the program or outline how it compares with the logo-only program for the original Xbox. "We want to make sure the customers are getting the best experience possible," a company representative told CNET News.com.

According to a contract between Microsoft and Mad Catz Interactive, the software giant will get a share of the wholesale revenue generated by the accessory maker's Xbox add-ons. An edited version of the contract was filed by Mad Catz as part of the company's annual report to the Securities and Exchange Commission. The edited document does not state the percentage cut that Microsoft will get from the accessory sales.

Whatever the royalty figure amounts to, it will come on top of a variety of other revenue sources for Microsoft. These include upfront licensing fees from accessory makers, the money Microsoft gets from selling the console itself and, most importantly, the royalties the company gets from those who sell Xbox 360 games.

The decision to seek royalties from console controllers is not unlike a move Apple Computer made earlier this year, in which it sought to get as much as a 10 percent cut from iPod accessory makers that wanted to display Apple's "Made for iPod" logo. The move was referred to by some analysts as tantamount to a "tax" on the iPod economy.

The Mad Catz agreement, which refers to the Xbox 360 console by its Xenon code name, also hints at the type of security that Microsoft may use to ensure that third parties work with it to produce Xbox 360 add-ons.

"'Security Feature' means Microsoft's proprietary protocol used to validate authentic devices on the Xenon platform as implemented in a Xenon Chip or other implementation method designated by Microsoft in writing," according to the Mad Catz agreement.

 

[Ghost]

Bad news for anyone hoping existing FF wheels would be compatible.

Wont make any difference to anyone else...who buys third party controllers anyway?

 

[PhoncipleBone]

This can be both good and bad. Hopefully we get some good third party stuff again like Ascii did back in the SNES days.

 

[Jeff-DSA]

Bad news for anyone hoping existing FF wheels would be compatible.

Wont make any difference to anyone else...who buys third party controllers anyway?

I loved the Xbox Micro Con controller. I actually think it's the most comfortable Xbox controller out there. It's not quite as good as the S, but it's more comfortable and the black and white buttons are superior.

**** you for this MS, it's like Nintendo's days of high licensing fees.

 

[Kobun Heat]

This was bound to happen as soon as hardware manufacturers came up with a way to do it. Unlicensed third-party accessories don't benefit the hardware maker at all. Note that Sony already did this with memory cards on the PS2.

 

[joaomgcd]

No hope in using my old Xbox controllers with the USB adapter then.

 

[The Faceless Master]

oooh, looks like doom for arcade sticks and smartjoys... hardcore gamers = dissed

 

[Neex]

No hope in using my old Xbox controllers with the USB adapter then.

It doesn't necessarily mean that third party accessories won't exist, it just means that there will probably be less of them. So that USB adapter is still a possibility.

 

[Link316]

its only gonna get worse if they become the market leader

 

[joaomgcd]

It doesn't necessarily mean that third party accessories won't exist, it just means that there will probably be less of them. So that USB adapter is still a possibility.

Oh sorry, I meant with my current Xbox->USB adapter. I had the hope that could be a possibility...

 

[Chittagong]

I'm glad with this news. After Super NES, accessories went to shit and became crappy, ugly and cheap. ASCII Pad... Super NES Advantage... mmm.....

 

[SatelliteOfLove]

I'm glad with this news. After Super NES, accessories went to shit and became crappy, ugly and cheap. ASCII Pad... Super NES Advantage... mmm.....

True, but us hardcore Fighter fans love our sticks; and from what I'm reading, that may not be possible on the 360. :?

 

[sonycowboy]

I'm glad with this news. After Super NES, accessories went to shit and became crappy, ugly and cheap. ASCII Pad... Super NES Advantage... mmm.....

Yes. Less choice is ALWAYS better. Never bad news to some.

Luckily absolutely everybody loves the first party controller, because word is that no other wireless controller will be allowed for some period of time.

 

[sangreal]

True, but us hardcore Fighter fans love our sticks; and from what I'm reading, that may not be possible on the 360. :?

Why wouldn't it be possible?

Available at the launch of the new game platform, Mad Catz plans to distribute a full range of high quality Xbox 360 peripherals including game controllers, an arcade stick, a dance mat, and a steering wheel.

The only difference is being an official licensee isn't optional anymore (if this is true)

 

[koam]

Antitrust laws.. unite!

 

[Particle Physicist]

This can be both good and bad. Hopefully we get some good third party stuff again like Ascii did back in the SNES days.

i dont see how this is a good thing at all.. :/

 

[sangreal]

http://www.sec.gov/Archives/edgar/data/1088162/000119312505140780/dex1026.htm

For the full text

1. 	Licensed Game Peripheral Products
  	• 	  	Wired game pads
  	• 	  	Wired steering wheels [b](FFB not included at this time)[/b]
  	• 	  	Wired arcade sticks
  	• 	  	Wired flight stick (joystick)
  	• 	  	Wired dance pad

 
2. 	Excluded Products
  	• 	  	Light guns
  	• 	  	Cheat cards
  	• 	  	Memory units
  	• 	  	Wireless Products
  	• 	  	Hard Drives

uh-oh

 

[Mooreberg]

Wired arcade sticks

 

[teiresias]

It's only a matter of time before Microsoft starts requiring their game console to detect that you have a PC running a version of Windows on your local LAN before allowing you to play a game.

 

[Baron]

Hm, I wonder if the USB Saturn Pad Sega has been producing for PCs will work on the 360. I don't see why not.

 

[The Abominable Snowman]

No light guns???????

I hope that 'excluded' list means that anyone can make those products...

 

[sangreal]

No light guns???????

I hope that 'excluded' list means that anyone can make those products...

Light Guns don't work with HDTVs I thought

 

[sonycowboy]

No light guns???????

I hope that 'excluded' list means that anyone can make those products...

:lol :lol

 

[SKOPE]

...who buys third party controllers anyway?

 

[AndoCalrissian]

No light guns???????

I hope that 'excluded' list means that anyone can make those products...

Given that wireless controllers, memory cards, and HDDs are also on it, I highly doubt that. If Microsoft is the only supplier for those potentially hot ticket items, they can generate more profit off of it.

 

[The Abominable Snowman]

Light Guns don't work with HDTVs I thought

Older model 50/60Hz do not, but there are many HDTV models and 100/120Hz models available for all consoles. and PC

Well, aside Gamecube, but that's another discussion for another time.

I thought Light Gun games would work well with Microsoft's aims, and would compliment their decent (Japanese?) portfolio, which needs a little first-party fleshing out anyway.

Why the hell WOULD they disallow Light Guns?

 

[The Abominable Snowman]

Given that wireless controllers, memory cards, and HDDs are also on it, I highly doubt that. If Microsoft is the only supplier for those potentially hot ticket items, they can generate more profit off of it.

I know that. That was kinda, you know, tongue-in-cheek.

 

[sonycowboy]

This was bound to happen as soon as hardware manufacturers came up with a way to do it. Unlicensed third-party accessories don't benefit the hardware maker at all. Note that Sony already did this with memory cards on the PS2.

Except they found a way to do it anyway Sony just wouldn't license them the magicgate initially.

I guess this is what Microsoft meant by securing the system. Only recognized peripherals will work, although cheat devices will probably still find a way onto the system.

 

[SatelliteOfLove]

Why wouldn't it be possible?



The only difference is being an official licensee isn't optional anymore (if this is true)

URGH. Meant to type "custom sticks", (Happ & the like).