Still im not conviced about the OP

You take away all Nintendos first party exclusives, i dont think it would be the current world leader, and if you took the PS3 ones away i dont think it would be still going. 

I think people stay for the 3rd party quality games, but initially most buy for the exclusives, people arent running out to buy wiis this xmas for Black ops, there doing it for the exclusives like Wii Sports. 

And same for MS, sales are up dramaticly this year because of exclusive kinect and Reach.

Sony is consistently producing Killer Apps?

If this is true, then something's not right. I'll just keep buying exclusives though. :/

Like Rare? ;) Ok... I'll add another "why": they don't know how to choose which talent to buy... :D

Now seriously.. you can buy knowledge, you can buy people... you can't buy vision, you can't buy talent.

And, of course... it might be cheaper to "outsource" than purchase, which is the part I totally agree with the OP. But believe me... if they already had it inside, they wouldn't change...

Good, well thought out post, but it doesn't change the fact that I still wish their inhouse games were better, like BK and Perfect Dark. Their first party published games aren't usually so hot either, with the exception of the glorious Gears of War 1 and Halos.

And when you say "Exclusives don't sell consoles" . . . I agree. Alot. This gen, it honestly seems like the games aren't the primary reasons people buy consoles anymore. Spikes nonwithstanding.

What makes you say that?

There are plenty of games this gen that have moved lots of hardware.

The big place where an exclusive matters is if it is a "killer app" that a large number of people want, that people can only get in one place.  When that happens, an exclusive will sell systems.  Usually this is best early in the battle for marketshare in a given generation, which is used to get platform in place for development.

A "killer app" can end up being a feature, like DVD on the PS2, or motion control on the Wii also. 

What I'm gathering from the OP is that, essentially, "exclusive games are bad, and do nothing for the console."  If exclusives don't sell systems, then Nintendo wouldn't still be around since those games are the only reason the N64 and GameCube didn't totally flop. 

Exclusives are important, and there need to be more.  The reason I haven't ponied up the dough for the PS3 is because of gross lack of exclusives.  The Xbox360 has nearly all of the best PS3 games, and far more exclusives. 

Anyone who actually lived through the SNES-vs-Genesis (4th) Generation knows just how important exclusive games are.  They're the reason those two systems have so much strength and why they are so admirable even after all these years.  Not only do they each have untol numbers of excellent exclusives, but the back-and-forth war spurred on the creation of some of the best games ever made. 

Good post Squil. I completely agree...

Being on a hardcore gamer and on websites like this screws up ones perception of being able to judge the business side of things and what matters.

If I was a Microsoft investor, I would really have to give them a hand for their handling of the gaming division (and kick them in the ass for their tablet and windows phone fiasco)

Usually Microsoft is a very slow giant, but the turn they made with the 360, Kinect and its public image when it comes to gaming is nothing short of amazing.

They went from the hardcore console shooterbox, to an all in one wonder with the hottest motion controller available in less than 2 years.

Very well thought out arguement. But in my opinion, first party games tend to have the most polish and the fact that MS likes to try to deprives us of high quality first party games tells me they don't care all that much about serving their users.