This would suck.

This would be so unexpected, why this decision long before the game is released? I will never understand corporations.

WTF?

Noooooooooooooooooooooo!

This is a bit of a head scratcher.

Did some accountant at MS crunch the numbers and conclude that moneyhats are more cost-effective than direct development for pushing your platform?

Dude something is going on with MS. I mean first letting Bungie go. Then the closing of FASA studios. And now rumors have sprung up about both Rare and Ensemble going away. Seriously what's going on with MS.

Worst-best case scenerio time:

Best: They are getting a massive amount of experienced  coders together to create Microsoft Gaming Studios Developement team so they have an insanely strong 1st party dev team.

Worst: They don't plan on making another Xbox and are getting rid of most of their devs. 

OH NO!

I wanted a Age of empires 4.....WW 2 RTS game

they can't do this!

Ummm... who's going to make my age of empires if they're gone?

yea well if you've noticed Microsoft Game Studios has been nothing but publishing games not creating them which doesn't bode well for anymore 1st party titles outside of companies they own.  So the best case seems unlikely.

As for the worst to tell ya the truth at early 2007 on another forum I was talking about how possibly if things didn't go well with MS they'd start dropping some of their developers and exit the gaming industry and stick to the PC software world where they'll only publish games.  Of course I thought they would only dropoff Rare and Bungie and I was thinking they'd sell them.  Letting Bungie go without sell was a huge surprise to me haha. 

So maybe MS is looking to get out of the industry I mean it's possible.

 Yes I have noticed. And you stated exactly why they would want to have a 1st party dev team. So they can actually MAKE the games as well as publish them.