To be clear, when I say that Xbox Studios is one of Xbox's biggest problem, it's not about demanding those studios sell millions upon millions of units.
It's the COST component. Obviously unique first party content is important to a platform system, but the reality is that first party content can't cost far more than the revenue it creates. Base cost is a severe problem across the industry, and it's clear to me that Xbox Studios group became too expensive for what they were generating.
And let me be clear, it's not entirely their fault. The market has become grossly saturated since the late 2010s, and many "good" games disappear into the void. Maybe they could stomach that cost longer if several more titles did OK. However, as I said yesterday, after repeat misses, a pattern starts to emerge. A business can't keep spending money on the same thing, waiting for hits to magically materialize. **Additionally, higher cost means far less tolerance for market failures.**
Cost needs to come down. That's the only lever left to pull.
To be clear, my point is about COST, not the need for first party to sell millions upon milliom of units.
No platform / publisher can afford to have these 100-300 person teams working on products that 1) have limited payoff and 2) are outsized in terms of cost versus potential return.
Everyone knows that the majority of revenue on these platforms has shifted to content packs, MTX, 3rd party sales, etc.
The point here is the outsized cost of first party studios.