I think if MS closed RARE people lose their crud really. Lionhead annoyed a lot of but RARE? A historic studio of that caliber shutting down would be bad press for Xbox but also really highlight what an abject failure MS has been at managing studios. I feel they will keep RARE open just because if they did people would consider the future of Xbox and also they paid a lot of money for them too.
Sorry I meant to that Playground games comment by an insider.
Rare isn't what it used to be. There is no real caliber to that studio anymore. Go back over the last 12 years and look at the games they've made. Oh boy... some real high caliber stuff right there. The Killer Instinct reboot wasn't even developed by them. A lot of studios with long histories have closed down even when people thought it would never happen for one reason or another. Microsoft isn't going to keep a studio that's draining them of money and hasn't managed to produce or continue a legitimate hit franchise in over a decade. It wouldn't be like Sony closing Naughty Dog after a bad game.
I think you probably already missed the press highlighting Microsoft's failures when it was discovered that suddenly about 8 of their studios don't even exist anymore. This wouldn't be anything shocking. The sudden closure of Lionhead and Press Play when they were both in the middle of a project was already enough to bring to light the issues within Microsoft's internal studios, not to mention Twisted Pixel exercising its right to leave the company before the closures even came to light. Preceded further back by Bungie's departure, which brought forth a whirlwind of speculation and rumors. Closing Rare isn't going to be any bigger of a deal than any other closure. It would just be another victim.
I think you're grossly overestimating how much people care about Rare at this point. A lot of people have predicted Rare's imminent closure. Hell, there were people who were more surprised Lionhead got closed first. I was one of them. Microsoft's first party is already looked at as nothing more than Forza, Gears, Halo, and Minecraft. It's a popular thing among the community in general now to say that if you're not making a hit franchise for Microsoft, you're gonna get closed. If that happened to Rare tomorrow, you would mostly get a lot of "see... told ya".