I don't think that Microsoft is as good at negotiating as you say, Bod (main tactic is usually "throw money at it"), but you do show that Microsoft has many strengths that people might not appreciate the impact of. Great post even I disagree with the titular portion of it.

Money IS negotiating. People in here seem to be saying: "They aren't good at negotiating, they just throw money at stuff!" 

And that is precisely what I mean. Despite all these recent deals with third parties -- Katamary, Guitar Hero, Madden, Grand Theft Auto -- Microsoft is actually making a profit these days. Last quarter was a sizable 150 million, and I strongly suspect that this quarter will see as much or more. If they're making money while still making these sorts of deals with third parties, then it's not as if Microsoft is simply bankrolling people with funds from other divisions anymore. They're investing their video game profits into third party video game ventures, to help drive further video game profits. That's all. 

Here's a simple point: people complain about Microsoft having so much money, but let's compare them to Sony (fair warning: this isnt' intended to be a criticism of Sony, only a vindication of Microsoft). Over the last 4-5 months, Microsoft has actually made a profit (150 million last quarter, probably even more this one), while Sony has lost over 800 million. So, let's start with the premise that Microsoft is throwing their money around like crazy. Fine. Then where is Sony's money going? If Sony isn't "bribing" third parties, then why is Microsoft still able to make a profit in video games, and Sony is hemmoraghing funds? 

And Nintendo is the counter example: they ARE making tons of money, but aren't willing to share it. And I'm not saying they should share it -- business is business, and it's entirely appropriate for a company to tell other businesses to handle their own (as Nintendo is clearly handling their own like no other). But again, clearly there are advantages to sharing the wealth around, and Microsoft is doing just that. 

I'm going to simplify and distill my last post for people:

Negotiating is money. I wasn't suggesting that Microsoft are such golly-gee swell guys that everyone wants to develop for them, I meant that they do a good job of distributing funds to third parties -- via marketing agreements, exclusive content arrangements, or timed exclusive contracts -- to encourage development on that platform. And yet they still make a profit these days.

Microsoft is using their video game funds to encourage third party development.

Sony isn't making video game funds. All of their "funds" are going in to to selling the PS3 at a loss to drive market penetration. 

Nintendo is doing god knows what with their massive, massive funds. It's probably really good (Nintendo knows what it's doing), but it also probably isn't serious marketing deals with third parties.

Money talks and Microsoft does a lot of talking.

Damn it! I knew I forgot something....

Seriously though. It's just an theory. I have no proof nor do I shout it from the rooftops or refuse to buy MS games because of it. There is no solid proof, however, should they be doing something like this it will come out in the open eventually.

@MrPickles------- I thought about the ease of development and extra time devs have had to program for it and accept that as a likely cause for most of the glitches especially the ones that were easily fixed ie. (Assasin's Creed, The Orange Box, Madden, other framerrate issues) But that just doesn't hold up for the GH3 and Rockband mistakes. The pro-logic error can be explained by the Wii lateness theory, however, my biggest piece of evidence is the obvious exclusion of Quickplay co-op in PS2, PS3, and Wii versions of GH3. The release of a patch to fix it on 360 just days after retail launch, and lack of patch for the PS3 (the Wii and PS2 don't have hard drivees) just seems extremely fishy. Keep in mind that quickplay co-op was fully functioning in GH2 right out of the box.

Couple that with the PS3 version of Rockband not being compatible with GH3 guitars and Activision's refusale to let Harmonix release the patch for it and it begins to smell like Cape Cod.

That was what I meant by the pro-logic error. GH3 was supposed to be Dolby Pro-logic stereo.