I wanted to add that there is a general vibe in this overall thread (not your comment - the vibe that you have responded to) that Microsoft essentially muscled their way into the console industry and achieved market dominance, largely because of their financial abilities.
Certainly, their financial abilities allowed them to shoulder the losses on hardware, but as you have pointed out, it is a common practice to implement a loss leader [1] strategy on hardware to achieve market share for other services (e.g., subscription gaming services, games, etc.)
Back to my point regarding financially muscling their way into the console market and why I do not believe that this is an entirely correct assessment.
For example:
1. Microsoft included a NIC in the XBOX at launch. It was baked-in; this was not an add-on. Sony had to step up and compete by offering the PlayStation Network Adapter, initially as an add-on. Also, Microsoft launched XBOX Live approximately 4 years ahead of PlayStation Network... 4 years!
Before that time, Sony essentially relied on game developers and publishers to support networked gameplay via a server infrastructure that was not controlled or offered as a subscription service by Sony. That service did not occur until Sony offered PlayStation Network.
2. Microsoft included a hard disk (a console industry first) in the XBOX, for storing downloadable content.
These are two examples of why it is not entirely correct to say that Microsoft achieved success solely by financial ability alone.
It was Microsoft that had the vision to launch with a unified, subscription-based gaming service with XBOX Live and a hard disk for storing additional content. They ultimately delivered a superlative networked gaming experience out of the gate, particularly with the quintessential launch title, Halo: Combat Evolved.
Well put, and although I may be somewhat biased, I agree -- financial muscle only gave us the ability to get on the field, it doesn't help you win or have a long-term strategy. The original hardware profile (PC-like so tools were available) and including a HDD was what allowed us to get game developers on-board quickly. Including the HDD and the NIC were also the bets, and as I tried to say in my original post, these were the innovations and the bets on the living-room Trojan horse -- we could afford to include these things because the console business model involved an audience size, a higher bill-of-material and a payback model which things like set-top-boxes and WebTV did not.
Securing a few awesome first- and second-/third-party games exclusively to the console was also a critical tactic early on. I remain somewhat surprised that outside Halo there are no longer standout exclusive titles. I don't know why that effort has been dropped, that's stupid, too.
I think pursuing exclusive titles is a bit of a wild goose chase. They're necessary more to prop up a struggling console than to further benefit an already successful one. If the system is doing well then you don't have to convince anyone to target it. Especially in today's world where the big game engines target multiple platforms so easily, deciding to target only one is just leaving money on the table, even if your studio has strong preferences towards a specific console. Generally the only way to ensure an exclusive is to buy or pay off a game studio, but that can be self-defeating because that money offsets the increased game revenue.
But if you're relying on your console being a solid default favorite platform for games because it makes financial sense there's nothing wrong with that. It may not be as satisfying a "win" as exclusivity, but it's precisely the sort of win that you want. And it should still be flattering that developers are targeting your console merely because they think it's a good system rather than out of any backroom dealings.
Of course, you can change the equation with custom hardware, as the Kinect has done, and that has generated a few decent exclusive titles. We'll see what MS does with the hardware with the next console rev, maybe they'll be able to deliver more on the promise of the hardware and bring more major developer attention than it's gotten so far.
I think you are right, pursuing big name exclusives is often a fool's errand, and also that temporary hardware advantages like Kinect can cause exclusives to just happen, at least for a while.
But I also think that a thriving indie dev culture, as the OP is calling for (or rather, chastising MS for thwarting) can do the same thing: it can give a platform exclusive titles (games, but the same could be said of non-game apps) at least for a while, just because small indie devs can often only target one platform, at least until their indie title is a hit bringing in the cash to target other platforms.
(Had a little bit more but will have to leave it there as my laptop's reserve battery power warning is getting very insistent.)
I wanted to add that there is a general vibe in this overall thread (not your comment - the vibe that you have responded to) that Microsoft essentially muscled their way into the console industry and achieved market dominance, largely because of their financial abilities.
Certainly, their financial abilities allowed them to shoulder the losses on hardware, but as you have pointed out, it is a common practice to implement a loss leader [1] strategy on hardware to achieve market share for other services (e.g., subscription gaming services, games, etc.)
Back to my point regarding financially muscling their way into the console market and why I do not believe that this is an entirely correct assessment.
For example:
1. Microsoft included a NIC in the XBOX at launch. It was baked-in; this was not an add-on. Sony had to step up and compete by offering the PlayStation Network Adapter, initially as an add-on. Also, Microsoft launched XBOX Live approximately 4 years ahead of PlayStation Network... 4 years!
Before that time, Sony essentially relied on game developers and publishers to support networked gameplay via a server infrastructure that was not controlled or offered as a subscription service by Sony. That service did not occur until Sony offered PlayStation Network.
2. Microsoft included a hard disk (a console industry first) in the XBOX, for storing downloadable content.
These are two examples of why it is not entirely correct to say that Microsoft achieved success solely by financial ability alone.
It was Microsoft that had the vision to launch with a unified, subscription-based gaming service with XBOX Live and a hard disk for storing additional content. They ultimately delivered a superlative networked gaming experience out of the gate, particularly with the quintessential launch title, Halo: Combat Evolved.
[1] https://en.wikipedia.org/wiki/Loss_leader