Jez is an idiot.
Half of the reason we're at this point is because they were going in that direction. Gamepass and Xcloud were strategies explicitly meant to attract casual mobile gamers which far outweigh casual and core console gamers. It's a fundamental misunderstanding of how the market is structured.
Gamepass ended up being defeated by Free To Play before the battle even started.
Gamepass is all about paying every month and have a flood of games to play. The idea being a cheap option to have a buffet.
But Free To Play is about NOT PAYING ANYTHING, and to play only one or two titles that take up ALL of your free time so you have
no reason to play anything else.
Nothing is cheaper than Free. And time-eating Live Service meant you are incentivized to NOT play other games. Gamepass was an outdated model that quite litterally was out-maneuvered by FreeToPlay, being inferior in every aspect for the Casual audience they were both targetting.
As others already mentioned, Genshin Impact had
60million MAU in 2022. That is just ONE game, beating the MAU of Gamepass as a whole by nearly double.
It isn't that Xbox didn't realize FreeToPlay makes money; it is that Xbox bet the horse on GamePass the same way Sony bet the PS3 on the CELL. The decision was made and it is too late to pivot. GamePass basically was not compatible with Free To Play and thus lost that entire, gigantic customer base.