Not baiting, not trolling, not my usual Nintendo fanboyism. This is a serious question.

When I bought an XBox 360, a little over 4 years ago, it was for two reasons:

1. None of the fighting games I wanted to play were going to come out on Wii
2. Of the two consoles that were getting all the same AAA releases I wanted, a used 360 was significantly cheaper.

Over time, the XBox grew into my choice system for fighting games, shmups, region-free import shmups, and offbeat Japanese titles like Catherine and Lollipop Chainsaw.

In more recent months, I have soured on XBox. I have come to realize that the PS3 has MUCH better exclusives, and that Microsoft has a great many problems.

Most importantly is this: their DLC/XBLA policies are absurd. Anything submitted to Microsoft has a mandatory three month waiting period before it can be approved. That means that unless a developer intentionally hold back DLC and/or digital games on all other platforms, Microsoft is always late to the party. A great example of this is Pinball Arcade. The PS3 version has three DLC packs available. The 360 version has ZERO. In a video game market where new sells and old (which is any game released more than a month ago) is tossed into giant bargain bins, developers don't like having to wait to have their games released. The makers of popular games such as Fez and Minecraft have said that the Microsoft approval process is so terrible and pointless that they probably wouldn't do it again if they had the choice.

A little over a year ago, Microsoft Japan issued a directive forbidding companies from releasing region-free games. International releases are expensive, and for small companies such as Cave, 5pb and Qute, this was a way to sell more copies of games that would usually end up rotting on store shelves, because the XBox doesn't sell at all in the Japanese/Asian markets. Microsoft decided that this was unacceptable, as they were being "cheated" out of money since the games were being sold to gamers in markets that the games weren't licensed for. Meanwhile, a great many North American XBox 360 releases do not have region protection: http://www.play-asia.com/paOScore/19-9-eNp9kGEKgzAMhe/SA4x2daDZYSRK54TalbYbyPDuS7ugmz/8lfDlvccjCKqCd4QziNiJawQFQuVJAOMvaEiB1rRp9oa5zLMC8UVIiJI0Ga3dnEtBg3FHCgrpH5NnyQi63vmN69ej0rvjy4Sj8AuIYGx747aqqUtxxinv5EodssCHIfEqT1Ku1BYqQTCZ0D3/SbyPfvvN8gHV1l/7-49-en.html

North American releases are encouraged not to have region protection, so as to give gamers in regions where XBox is not a strong seller (aka Japan) an added reason to own their system. But apparently the street cannot go both ways. The makers of Under Defeat HD lamented that they had wanted their 360 version to be region-free, and were told that they could not.

Microsoft has strong relations with EA, Activision, Take-Two and its own Microsoft Game Studios, all of which are the primary drive of its sales, but its relations with international developers, small developers, and indie developers are weak.

But Microsoft outsells Sony in the all important American market, and Wii lacks the technical specifications and physical disk space to do what many devs want to do, so playing ball with Microsoft is a necessity, much like playing ball with Nintendo was a necessity in the NES/SNES era.

But... we all know what happened to Nintendo once playing ball with them STOPPED being a necessity.

By the end of the year, Microsoft will have the worst console on the market. They have managed to keep their hardware sales up by rebranding themselves as an entertainment center instead of a gaming system, and their gaming seems to be faltering as a result. XBox 360 is now used more to stream music and video than it is to play video games: http://www.techpowerup.com/163292/Main-Use-of-Xbox-360-is-Not-Gaming-Microsoft.html

I think a lot of developers, especially Japanese developers, are looking for an excuse to abandon Microsoft. A strong launch for the Wii U, combined with strong holiday sales for the PS3, could spell the beginning of the end for Microsoft's console division. The XBox 720 rumor mill has been working overtime lately though, and it's being said we'll see the 720 by the end of 2013. That will be the true test. A weak 720 launch (and it's hard to imagine a competitive pricing point for a system that's being hyped as 6 times more powerful than a PS3) against market share gains by Nintendo and Sony could spell the end of Capcom/Namco/Konami/Atlus/Sega/Whatever titles for Microsoft. Of course, Microsoft may not need them. Out of the best-selling XBox 360 games, the first Japanese game on the list is Resident Evil 5 at #34: http://www.vgchartz.com/platform/7/xbox-360/

It's hard to say though. If all your system has is GTA, Halo, and Call of Duty, and 2/3 of those are available on systems with more diverse libraries, which system are you going to buy?

The 360's best selling game has sold 18 million copies. The Wii has 7 games that have sold more than that.

Also, as of April 2012:

360 has sold 67.2 million consoles worldwide
PS3 has sold 63.9 million consoles worldwide

The systems are more or less evenly matched right now in terms of market share.

Microsoft is beatable.

We're talking about whether MS's current business practices are sustainable. Will GOW4 and Halo 4 sell as games? Yes. But will they sell new consoles? Probably not. If people didn't buy into Halo 3 or GOW 1-3, why would they suddenly buy into sequels?

If something becomes unprofitable though, you kill it off. XBox was a pet project of Bill Gates, and he retired.

Drew Linky wrote:

I think all of this conjecture is based off of extrapolation, which is never a good thing...

I think this is a fair statement, but not for the reasons you said. Moreso, because real life doesn't often follow predictable patterns.

If we were to extrapolate the success of the PS3 based on the successes of the PSX and PS2, it should have been a runaway hit. But factors such as a delayed launch, system shortages at launch, weak launch titles, an uncompetitive launch price, and the fierce popularity of the PS2 prevented this from happening.

Alternatively, if you were to look at Nintendo consoles sales from the NES through the Gamecube, you'd notice a decline in every consecutive generation. The obvious theory would be that the Wii would sell even less and would spell the end of Nintendo's days as a console maker. Obviously, this did not happen either.

I don't have Kinect. So that's a slight flaw in this plan.