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Microsoft have spent the last few years building up a network of internal studios.

I'd say that a number of their previous full studio acquisitions turned incredibly sour (i.e. Rare; Ensemble Studios).

This doesn't make the slightest lick of sense to me. I've seen Kowen saying in the past that if they were that serious about it, just poach staff from the studios and have them come over and work on new IP's specifically for Microsoft. Although it wouldn't have the same result, it'd be significantly cheaper while still being extremely effective.