I don't know that there is a ton of credibility here. XboxEra has run with speculation in the past. They have a few associated folks like Klobrille and Jez that have somewhat decent second hand info but at the end of the day its always hearsay.
That said, the game could totally be episodic. It is a brand new studio and they are releasing a game for the first time. Going episodic might give them a chance to get a minimum viable product out the door rather than risking a full AAA dev cycle and budget on a game that might bomb. I think episodic content in Game Pass is a no brainer and I'm surprised that nobody at XGS is already doing it. They did hire one of Bungie's writers who worked on the initial Destiny 2 Curse of Osiris + Warmind expansions as well as the Forsaken season pass content which were all somewhat episodic. There is also the rumor that the game is a third person Perfect Dark reboot which I could see being released episodically like Hitman.
I think people need to get their expectations in check for the game. It is the studio's first game and first time working as a team. That has to be even more difficult with the remote working environment right now. It is incredibly hard to put together a new studio and release a massive AAA game without any prior experience working together. Those synergies get built over time. Naughty Dog's first game wasn't Uncharted or TLOU either. I think Xbox fans are putting too much faith in it, in a "this will show the Sony fans that we have games" way. Similarly I think Sony fans are feeding into that mentality and often compare apples to oranges. Xbox absolutely has a draught of good first party content and I don expect that to turn around overnight. Studios take time to build and the investment in first party didn't really begin until mid 2018. I don't think the barometer for this game's success should be if it can stand against Sony first party but rather how it compares to other studio's first games. I think fanboys on both sides are too busy feeding into this comparison narrative and I think it will be hard to live up to those expectations. The Initiative could deliver an amazing product but the level of hype being built around the studio is not appropriate for it being their first game.
TL;DR: Grain of salt. Source isn't really an "insider". Game could be episodic based on writer, genre, and Game Pass. This is studio's first game so don't expect Uncharted. Judge them based on it being their first game not based on your fanboy console war metrics.