Rare would f it up.
What is the last Rare sequel you really enjoyed?
Jetpac Refueled in 2007? Fact is that rare hasn't made a AAA game since StarFox Adventures. . .actually, they haven't made a AAA quality game since Perfect dark 12 years ago. There is also the question of how many of the original KI team are still employed with the company.
If Microsoft really wanted to make some money they would contract the work to Arc Systems but microsoft is more concerned with developing new IP's for the kinect that half the people I know have and that none of them play with anymore. But honestly, I'm less concerned with KI as I am with every other missed opportunity MS has had this generation.
1) They had their own AAA JRPG series in Lost Odyssey and they never followed up (In the wake of The FF13 debacle 2 1/2 years ago they should have been on the phone with Sakaguchi begging him for LO2 or Blue Dragon: Kinect)
2) They lost exclusivity to Mass Effect. (During the Xbox generation they were the only reason RPG fans gave your brand a second look and after they release what was, up to that point, their best RPG ever. . .you let EA buy them)
3) DOA5 on PS3 (They could have bought a limited exclusivity which would have ensured that they got the lions share of the buys - because who actually buys fighting games 1 year after its release?)
4) You lost Bungie and its next IP is multiplat (ME thing all over again. Sure, Bungie probably didn't want to make Halo anymore and thats fine - you should have given them the opportunity to fuck up and then kicked em to the curb. Now if their next IP is a block buster than you have to share in the profits with Sony and Nintendo.)
5) They nerfed the Kinect to save money.
And now there are rampant rumors that the new Xbox needs to always be connected to the internet and games are lock to 1 or 2 consoles. Ok, well now you'll only see Sony machines at LAN events. . .matter of fact, you'll probably end up seeing them in most living rooms too.