I know you want to post doom and gloom for Xbox, but MS just made $15.5 billion profits last quarter. Pro-rated thats $62 billion profits per year.
Pretty sure they can cover Bethesda and Game Pass overhead.
But keep on being armchair accountant and "MS runs in silos" narrative.
Nothing I've written suggests "doom and gloom" for Xbox, I'm just telling it how it really is.
Look, I know the way they are marketing stuff makes people think "is there a limit to this thing?", but the truth is of course there's a "limit", they will have a set of targets and a certain annual budget within which to hit them.
Obviously I'm not privy to the exact numbers, but you don't need an MBa to figure it out:
They will be budgeting to release X number of titles to GP per quarter, of which Y will be headline releases, and Z will be catalogue product to fill out the roster and replace titles that are due to fall out of circulation. Of those titles, the Y group will be anticipated to be the most valuable, and so they will want to provide those titles from first-party as much as possible. Because buying them in is naturally going to be more r expensive than Z group product, and will also have the highest probability to be profit centres in their own rights.
Obviously opportunities will exist outside of the currently known to snatch-up potential hits from third party providers, so a certain amount of the budget will need to be set aside to take advantage should they crop up.
That's your fundamental formula, and they need to fill it out in the most effective way possible. Which means all kinds of stuff relating to release timings, dev cycles, and production budgets. Excess fat will get cut in order to assure adequate funding/resourcing for the important stuff. Phil won't be in his job for long if he's constantly going cap-in-hand to uncle Satya for a top-up to his departmental war-chest.
Because ultimately Nadella will have to justify everything to the bean counters and the stock-holders. And of course the bigger the spend the more scrutiny will be applied.
This is just corporate America. And the decisions made on a fiscal level filter down to the product level experienced by the consumer.