I got into this never ending debate with my friend about Guitar Hero / Rockband. He said that he was wondering if Microsoft was going to sue Harmonix for making Rock Band so similar (which is ridiculous of course). I told him Why? Microsoft doesn't own Guitar Hero it's Activision. He then goes on this whole spew about how he saw Bill Gates play it at this conference and telling me "Why would he show another companies product at a MS show" And i proceed to tell him about how MS pays for games to come to their console, developers don't pay them.

Long story short, he thinks Microsoft gets royalties for every game of Guitar Hero sold and i think he's full of crap, can anyone confirm who is right?

Microsoft does get paid for every game of Guitar hero sold.

They also get paid for every game of Rockband sold... and every other game on the console.

Same for Sony and Nintendo.

It's one of the main reasons to make a console.

Yes, but he thinks MS gets royalties for EVERY game sold, including Guitar Hero sold on Wii PS2 PS3 etc. I should of clarified more.

For every game that comes out on 360, MS gets a small amount of money.

But if MS paid for exclusitivity or sent their MGS studio staff paid in full, then this counteracts the 'royalties'.

MS is acting as a hardware provider. Of course both Activision or Harmonix has to pay the platform owner something.

Ah. No they don't, just games they've published, liscensed, or that are on their system.

@ OP but thats not to say that microsoft dont pay for games to come to their console - they do, at least for exculsives anyway

Of course microsoft gets money when a game based on their console is sold, you are maybe right in some cases that MS pays for a game like what happened with final fantasy or other games.

 MS doesnt get royalties for other platforms obviously.

But if a game gets published by Microsoft e.g. Mass Effect and comes out on other platforms, then they get royalties.

It is the standard, but there are special cases. For example(Im making this up): Say Sony lets MGS4 go royalty free. Konami gets more $$ to cover dev costs/profit and Sony can move more units.

Alright thanks guys, i just needed something to show to my friend to prove hes nuts, hopefully this does the trick =).