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Brennan said:

I think it depends on the sales trend. If it goes on like now, with the PS3 / 360 gap decreasing by 200k a week, it could spell a quick return to the last place for MS. At 200k a week, the gap would be down to zero then favorable to PS3 in only 6 months (5 million gap).

I doubt the MS shareholders would allow another last place in video games after the Xbox 1 fiasco which lost billions. Gaming was never one of MS main businesses to begin with...

So IF Natal doesn't succeed and PS3 increases its domination in weekly sales, I think there's definitely a good chance that MS gives up on gaming. Remember the 360 is really successful in only one country in the world, the US (two actually, with the UK being the other for cultural reasons), partly for nationalistic reasons. In every other country, PS3 already has a bigger installed base while being more expensive and despite being released one year later. Hardly a success on a worldwide scale.

On the other hand, if Natal succeeds or MS somehow manages to avoid being last again (which I highly doubt according to current sales trend), then they won't give up on gaming and will take part in another console gen.

I personnally hope they won't leave as competition is good. I don't hope they succeed too much either, since I don't like their business model where you pay for everything including free things like peer 2 peer online gaming, where ads are everywhere and the hardware is unreliable... Worst than everything, they tend to close more studios than they open, and use their money to buy timed exclusives instead of helping game development like Sony does. We need more MS 1st party studios quickly.

If the 360 is profitable for Microsoft currently, why would they drop out?