Update: As a clarification to the original article, the described advertising cut is currently not an immediate factor, as all XNA developers are receiving 70 percent of profit regardless of whether their game was given a feature spot or not. However, if Microsoft begins to impose fees on advertising, the situation could change. For now, though, the cut remains as a flat 30 percent across the board.

Microsoft is taking in a large chunk of revenue from titles released through its XNA Community Games label — as much as 60 percent, according to developer Mommy’s Best Games. This is giving developers little room to recoup development costs or fund future efforts, especially if sales are less than stellar.

President Nathan Fouts lamented over sales figures for the company’s well-received XNA effort Weapon of Choice, revealing that it pushed only 10,000 units, placing revenue stream in the category of “that hurts.” Based on what was spent during development, 20,000 units and above would be palatable according to Fouts, but he does not anticipate sales picking up all of a sudden, seeing as the title was released four months ago.

Fouts explains that Microsoft imposes a baseline cut of 30 percent and a potential 10 to 30 percent on top of that for advertising fees. This is all in addition to paying for royalties, taxes, as well as hardware and development costs.

It’s clear developers on XNA have it tough, and the fact that the Community Games section is a relative unknown to most 360 owners isn’t helping one bit.

Big fish in a shallow pond [Mommy's Best Games]

Microsoft Can Pocket Up To 60 Percent Of Revenue From XNA Titles [eXophase.com]