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Xbox 360 is targeted at hardcore gamers, and up until now, they've managed to stay upright on their big number of decent releases.

But the future does not bode well:
Bungie, the Halo developer, is going multiformat
Bioware, the KOTOR and Mass Effect developer, has been bought by EA and is going multiformat
Bizare Creations, the people behind PGR, have been bough by Activision and are going multiformat.
The games that ex-Final Fantasy dude makes are not as good as they've hoped
Rare software hasn't made a triple A game since N64
They got a VERY bad name when it comes to hardware reliability

Face it, Sony will hit them where it hurts. In game releases.
Sony has far more top devs that are owned by them, or work exclusively for them.
Naughty Dog (Uncharted)
Insomniac (Resistance)
Guerrilla (Killzone)
Media Molecule (LittleBigPlanet)
Evolution Studios (MotorStorm)
Sony Studio Japan (Ico, Shadow of the Colossus)
Polyphony (Gran Turismo)
Sony Studio Liverpool (Wipeout)
Sucker Punch (Sly Cooper, working on Infamous)
Sony Studio London (Buzz, Singstar)
Sony Cambridge (24, now working on Eight Days)
Zipper Interactive (SOCOM Series)
Game Republic (Folklore)

Multiplatform devs are starting to get used to the PS3, and that, plus Sony's own PS3 exclusive games, and the fact that the movie industry wil slowly start to push consumers towards blu-ray (by releasing films first on that platform), wil hurt Xbox 360 in a big way.