I don't know the royalty rate for games but I made up my own rate model. Xenon being 1/4 the cost of PS3. If the reality is anything like my model. Then I see a major advantage for MS. They will have a low cost console. That is cheap and easy to develop for thanks to tools like XNA. But is also cheat to publish games for. And you make a major profit.
Game Development: $5,005,889
Royalty Rate PS3: $30
XB2: $7.5
REV: $25
Games sold: 6,800,895
Disk Price: $50
Amount Sold: $340,044,750
Royalties Made PS3: $204,026,850.00
XB2: $ 51,006,712.50
REV: $170,022,375.00
Profit Made PS3: $136,017,900.50
XB2: $289,038,037.50
REV: $170,022,375.00
After Dev Cost: PS3: $131,012,011.50
XB2: $284,031,248.00
REV: $165,016,486.00