I certainly agree that Microsoft has made a lot of mistakes over the years, but Drek's post is so full of hyperbole and subjective conclusions presented as fact that I can't take it seriously.
Here's my thoughts:
Microsoft's first party stable is basically as strong as it was at the beginning of last gen:
Lionhead = Lionhead
Turn10 = Turn10
Bungie = 343 Industries
Rare = Twisted Pixel, Press Play and Team Dakota (TP, PP and TD are small teams)
FASA = Black Tusk Studios
Carbonated Games = Lift London
Ensemble Studios = ???
??? = Kinect Rare
-I've tried to compare genres of each studio as good as I can.
-The comparisons have nothing to do with the quality of the games, so there's no need to respond with "LOL HALO 4 SUX BRO".
(I feel that some of the studio replacements are better while some are worse, but that's obviously just my personal opinion.)
-PC studios have been left out of the equation since this is obviously a console centric thread.
-App studios like Soho and BigPark and secret/dormant studios such as Platform Next and LXP have been left out of the equation as well.
My takeaway from the current state of Microsoft Studios is that they've neither decreased nor increased the breadth of their internal studios. They've simply switched out some of their studios with new ones.
..which is more of a negative than a positive when I think about it. They should definitely have used last gen to expand and grow their lineup of first party studios.
Devs like Bioware, Pandemic and Redlynx would have made great addititions to Microsoft Studios, and those are just the ones that popped into my head as I was writing this post.
I could probably make a long list of Microsoft's mistakes, but I'm just going to focus on the ones that grinds my gears the most:
-Internal devs focusing on social/multiplayer-focused experiences. Lionhead was the last bastion of story-driven, single-player focused games, but they transitioned to "games as a service" and multiplayer with Fable Legends.
-Lack of long term planning:
1. Hesitant to greenlight Crackdown 2, rushed it to the market once it was greenlit. And hey, it sure would have been nice to have a studio with sandbox expertise ready when they finally decided to make CD2 (*cough* Pandemic *cough*).
2. Moneyhatting Tomb Raider when it's obviously going to be released for the competitor's console later down the line.
3. Denied FASA time and resources to make a singleplayer for Shadowrun 360.
4. Released PGR4 in the two week window after Halo 3 had been released, even though Forza 2 had already been released that year and that they could easily have delayed PGR4.
-Little to no interest in trying to prey on people's nostalgia.
1. Rallisport Challenge HD, PGR HD, Midtown Madness HD
2. Rare games in HD (Killer Instinct is a nice start, though)
3. XBLA games in HD. Splosion Man, Kinect Party, The Maw, Iron Brigade, Joy Ride, State of Decay etc.
Hell, they should take a look at some of the indie games as well. Summer of Arcade: Nostalgia Edition could have been a cool promotion on Xbox One.
That said, Microsoft Studios puts a lot of stock into their development partners. I think it's kind of foolish to completely gloss over stuff like Forza Horizon, State of Decay, Killer Instinct, Sunset Overdrive and Quantum Break
when they're obviously important games for the Xbox brand.
Plus, there are a few other things they've done right:
-PressPlay, Twisted Pixel and Team Dakota are imo a decent replacement for early 2000s era Rare.
-Diverse lineup of games with Killer Instinct, Project Spark, Ori, Sunset Overdrive, Quantum Break, Scalebound and of course Fable, Forza, Halo and Gears.
-They got rid of Don Mattrick and put Phil Spencer in charge. Plus, they're giving people like Chris Charla and Ken Lobb more time in the spotlight
-Getting people like Chris Seavor and Kev Bayliss to work with them again, even if it's just small parts in Project Spark and Killer Instinct 2013
-Putting together 343 Industries and creating a great shooter for the 360. (I liked Halo 4, sue me)
-They're still supporting the 360, even though it's almost 9 years old. Might not be as good as Sony's support for the PS3 in recent years, but it sure as hell beats Nintendo's support for the Wii.
-ID@Xbox is finally starting to gain traction (the parity clause has got to go, though)
All in all, I'm cautiously optimistic about the potential of Microsoft Studios (both internally and externally developed games). I think that they're on the right track, but I also realise that they could easily take a wrong turn 2 or 3 years from now.
At the very least, I'm interested in seeing where they will go in the future.
Sorry for the long and messy post. This subject isn't something you can summarize in two or three sentences.