I don't think we would be getting the AA games from internal teams though, that seems like it would continue to be Shannon's department. That's just based on the difference in costs between internal and external development, which is unique to MS (hopefully it changes.)
Correct, I also hope it changes because that inflexibility seriously hurts their options in their current situation.
Outside my hypothetical scenario though, I still believe it's a solid idea, just not one that could work as simply as it's typed.
That's where I feel MS's reliance on second-party relationships pops up, a situation that's been a part of Xbox's history since the launch of the OG and it's great support from Sega.
If I were MS in their current situation, funding second-party releases (like the rumors we are hearing about Playground and Studio Gobo) and giving support for titles like PUBG would be my way of stretching all I had as far as possible to make it through the generation, while in the background working on fixing my own first-party. The main issue would IP ownership, if MS retains ownership of the IP's they let second-party studios develop, then using the second-party studios to make these games while building actual first-party teams to take over the IP when ready (or acquiring the second party studio directly) would be my personal course of action.
So take the same earlier idea of 2 first-party studios, one working on bigger AAA releases and new IP's, the other working on more niche AA releases of older IP's, and apply it to the plan above. If either ended up being a poor decision financially, you avoid the risk of having to close an entire first-party studio like they did with Lionhead. If they do end up being successful, from there you have the blueprint already laid out on how to continue.
