Funding internal development is the smart thing to do. Developers will continue to make mulit-plat games. Exclusives have gone the way of the dodo. They're too expensive for people to have exclusives. There's less chance for return on investment, and even if you pay for an exclusive, that eats into Microsoft's bottom line. And if Microsoft pays for an exclusive, and it does poorly, it was a waste of money on both parts *cough*Ninja Gaiden 2*cough* rather with Sony, if someone wants to develop exclusively on their platform, they won't pay them, and if it doesn't sell well, Sony doesn't lose money in the process.
Also, with the way third-parties are going more and more Multi-plat, Internal development helps to diversify one company from another. Microsoft has the Halo franchise that's internally developed, and Viva Pinata, and Banjo, but not much more. Nintendo has Mario, Smash, Kart, Metroid, Zelda, etc. Sony has God of War, Gran Turismo, SOCOM, Uncharted, Resistance, Ratchet, Jak, etc. If you place all of the companies owned games together, 360's is blown out of the water by Sony and Ninty. Plain and simple.
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