Regarding ballooning costs, I've been thinking it's MS's plan to collect studios that typically crank out expensive games every 3 years or so, and having them slow down AAA production in order to maximize profits.
IE:
Old Method - Studio makes 2 AAA games within 6 years, costing $100 million to develop. Both games sell for a combined 12 million copies. Some profit.
MS Method - Studio makes 1 AAA game and 1 AA game every 6 years. Expenses reduced to $75 million for those years. Games sell for a combined 9 million copies. More profit.
There is a way to make more profit with less revenue by simply eliminating budgets and scaling down outputs. I think this is what they are already doing.