I don't think owning a studio is a strength given modern labor laws and the fact that the people are the brains behind games not physical machines or physical merchandise.

Delivering top quality games from top quality studios is a strength.  It doesn't matter who owns them. 

For every advantage to owning a studio there is also a disadvantage and vice versa.  For example, in large organizations employees can become complacent and are expensive and harder to lay off because you have to buy them out, but when you have a contract situation, you just get rid of them when they become complacent with nominal notice without cost.

@slimebeast

SONY's 1st PArty games sell more than MS's ones easily.

GT5:P alone has most probably covered 75% of the costs of GT 5 Development.

remember the vg chartz figure isn't accurate as online downloads of GT5 Prologue havn't been counted.

I dont have to hope, if the numbers of this site are correct the first party games are making money. MS have kept Lionhead and Rare whom make games which sell, they know first party games are still important. Also Turn 10, the guys who make Forza have remained.

I hope they are, that way they can make games for Nintendo again & everything will be right in the world  :)

You still don't know. Let me remind you that most game publishers have a very hard time making a steady profit of more than 5% - for example Ubisoft, EA, and Take Two - despite being multiplatform.

What conclusions you draw from this? Well, one must be that many games published by Ubisoft, EA, TT lost money.
(and another that video game developing is a very competitive market and hard to make money in)

Whenever you read publisher press-releases like "Assassin's Creed was a huge success, but games like Prince of Persia failed to meet expecations" it's very likely that PoP lost money. Or "Madden had impressive sales, but Mirrors Edge sold a lot less than EA had projected" it's very likely that Mirrors Edge lost money.

Now, these kind of games still sell in the millions. But they also cost a lot to develop.

So I can only imagine that new IP from Sony like Resistance, Uncharted, Motostorm, Lair and Heavenly Sword and games like Ratchet - games that sell on average less than 1.5 mill - lost a lot of money.

Btw, Rare is a bad example of proof that 1st party is beneficial. Rare is a disaster for MS, not just because it cost insane amunt of money to aquire, but because it's a big ass studio (300 guys or so?) who don't have a clue about what the market and gamers want. I bet MS would get rid of Rare tomorrow if anyone just wanted to buy them.

while Nintendo and Sony have the strongest 1st party developers, MS has the weakest. they've lost Bungie, Bizarre, Bioware, and Ensemble studios. all they have now is Lionhead and the Forza team....oh and Rare.

I know they own them now. They didn't own them at the time that Sony released Motorstorm though. Back then it was merely a second party title, the same as MS is doing with games. They just happened to purchase them following it's success. What should be noted though, is that had they not purchased them, they wouldn't now be stuck with a studio making an IP that is showing it's not nearly as big as originally thought. Maybe MS is on to something by having the option to drop developers and IPs at will if they are unsuccessful. Too Human was a big fat flop, and if MS wants they can let Silicon Knights out of the contract and be done with them and the IP. It does seem to have it's benefits.

I can't help but think MS is getting totally out of 1st party software and instead going to contract studios to make exclusives. It's a tight way to run, as you contract 20 studios one year (launch year for a console), then scale back as 3rd parties move in and even drop down to a handful if times are rough and you don't want the overhead.

My bet is Lionhead, Forza's team and Rare are still working on some things and when they are done those projects, they are done as MS 1st party studios.

Making money doesn't equal profit. Last I checked vgchartz doesn't report the costs of developing a game. Sony's financial statements do though, and that...well....

In this time and age(both Sony and MS said this) it is pointless to pay for 3rd party exclusives when you can make your own 1st party exclusives.

In the end 3rd parties will end up wanting more money from the other fanbase.

Sony was getting bashed for not securing 3rd party exclusives and I hope many of you understand why now.