These problems can be traced back to the Xbox 360. People like to say that the 360 was the heydey for Xbox - and I guess relatively speaking, it was - but as turbo milf Shania Twain once sang, "that don't impress me much".
Even back then, the brand was kept afloat by many timed-exclusive moneyhats. They were also incredibly lucky that Sony fumbled the bag so badly in the PS3's early days.
They were pretty much finished in 2010. Go back and watch some of the E3s from around the time they pivoted so hard into Kinect. All they had was Halo, Gears and Forza. Absolutely fuck all else for many years.
Say what we will about how Phil-sama has been handling Xbox since then, I do not envy the task of rebuilding that brand. You can only get by on moneyhatting your way into the industry and relying on competitor fuck ups for so long before you run out of road.
I think you're kinda cutting the 360 a tad short. While both it and PS3 could've been better engineered for their time (especially PS3), both in terms of cutting down the heat issues (avoiding RROD/YLOD) and providing better sustained performance vs. theoretical peaks (even while still sticking with PPC), the 360 is still an amazingly well-designed console. It's a "smart" system architecture and arguably the best of home consoles from the decade in that regard. Giving the ROPs 10 MB of eDRAM and a 256 GB/s internal framebuffer bandwidth was very clever, as well as how it did procedural synthesis of geometry to pass along to the GPU.
So I think, even if Sony avoided some of the more obvious mistakes with the PS3, maybe if they removed the Blu-Ray and also designed a unified compiler for the PPE and SPEs in Cell...with an overall better-designed system and early launch the 360 would've still won North America and UK that gen. Western devs would've still found the 360 easier to work on, but the gap between it and PS3 for multiplats would've been smaller from the start. Sony would've also needed to make the benefits of Flex I/O more immediately clear to devs; the GPU could access the XDR memory but it was very slow access compared to the local (and non-unified) GDDR3 VRAM. So things related to the OS, would've still lagged behind 360 and that was a defining difference between both systems that gen.
But aside from that technical-side stuff, yeah, the Bad Years of Xbox began setting in by 2010. It just took several years before people really started to see things for what they were.
The sad part of the story will be that they will make cuts in studios and games when this is what they really need to make a comeback.
Quality first party Xbox games is the only way to return. Without of course giving them to cheap mofos in Gamepass.
The industry was performing fine before the subscription bullshit. They committed suicide.
"Netflix of Gaming" was never going to work. And it still won't.
So you are telling me in 2010 and beyond or so their games production side sucked…
Phil… you know he took over Xbox Games Studios in 2007 (EMEA)/2008 (Worldwide) right

?
Never his fault, Teflon Phil is always blameless because people above and below him. No matter his position in the company for many years or the evidence. Why is there this cult of personality with him?
He's a marketing sly guy, and rehearsed his charisma over decades. Relatable enough to the frat shooter ball-and-gun guys who helped make 360 a hit, corporate enough to still seem friendly to larger net of gamers at large.
And working for one of the world's richest companies gave him lots of media access with websites, magazines, television networks etc. to keep things going.
MS will do what Activision was afraid to do. Making changes to COD is not for faint of the heart.
They may run it into ground while doing that. But its not happened yet.
The product is quiet strong though. I have uninstalled it cause its a time sink. But already looking forward to next year release.
COD is at the point where Halo was shifting from Halo 4 to Halo 5. An accelerating, overall gradual decline that'll probably slowly build until a few years from now where "the big one" releases and the whole franchise just implodes a la Halo Infinite.
And I say this because MS
STILL haven't fixed Halo, and all the main figureheads who were around to see IP like Halo and Forza Motorsport become irrelevant are still there now that it's happening to COD. Not only that, but the people who actually kept COD successful (like Kotick, love him or hate him), are no longer at ABK.
In the PS1-PS3 era it was still possible to change course during a generation and reap the rewards because the development time for a game were still short (1-2 years). That's not going to work anymore now it takes five years to release an AAA game. Any new game that's starting development in 2026 will launch perhaps in 2031. That's half way during the next gen Xbox' generation if that Xbox on PC hybrid launches in 2027. Far too late too change anything.
Well console-wise MS are cooked for a good while; they'd need several strong years of putting out great software to rebuild faith among the public, and then maybe if they decided to make a new console, it'd have to be called something that's
NOT Xbox, because that brand name is basically dead in terms of console hardware.