Will Microsoft cease to have 1st party games? Another internal studio closed.

[DirtyP2002]

I think MS knows how to run a business.

Running a studio must be very expensive. Think about the studio working on Killzone2. There was no revenue for the last 4 years. Sony paid them for 48 months without any kind of payback.

So it might be more profitable to go to a small but talented studio like bethesda for example and tell them to develop a game for your console. Maybe define the genre a little bit and pay them 15 million USD for it. therefore it is exclusive and you own the ip. Bethesda will get more money if the game suceeds. Everybody will be happy.

Infinite Undiscovery is such a game. Made by Tri Ace / Square Enix but MS owns the IP.