What a terrible statement. So Matt Booty is basically blaming the devs? The talking point we've seen toxic Xbox content creators and fans like Colteastwood, Crapdealer etc. push, now the head of XGS is more or less pushing the same thing?
See this is why it's dangerous for these gaming execs to get so close with the filth of their community. It rubs off on them, as well. The truth is the Series S, in hindsight, was just a bad idea. MS didn't think production costs would scale down enough this gen, and they wanted the mainstream and casuals onboard from Day 1. That's why they made Series S. They wanted to sandwich Sony is price & performance, but have lost on the latter and lost on arguably the most important metric: the value perception.
Yes Series S might be cheaper than PS5 Digital but you're getting a lot more value for $100 more (or $50 more if you consider getting the new black Series S). And a $399 PS5 Digital provides at least equal (if not superior) performance in 3P multiplats while being $100 cheaper than a Series X. Ironically by sticking to the normal console production strategy, Sony outplayed Microsoft and technically did nothing different compared to any other generation!
Now Microsoft are stuck supporting Series S for the rest of the generation. They promised Series S would get native versions of games for the whole gen, and they can't walk that back. Maybe there's a small window of a legal loophole they can utilize (there very well could be; I'm no legal expert), but it would be a big risk. Series S is going to pose some bigger issue going forward in terms of allowing 3P devs to scope their AAA games for a PS5/Series X baseline because the Series S simply does not have comparable specs. Looks like actual game development is not as easy in terms of scalability, as adjusting resolution of textures and image output.
I'm curious if they could lead to more 3P devs choosing to either skip Xbox platforms, or prioritize them for ports much later, since they have to always factor the Series S into the picture. And I think MS are trying to address this self-inflicted problem through big 3P acquisitions (when you own the 3P, they don't have a choice) and leveraging that to influence more 3P devs/pubs to "scope down" for stuff that's suitable for Series S, meaning those 3P are less able to baseline target Series X or more importantly, PS5. It would essentially be a form of engineering parity across the board, but through manipulated circumstances rather than naturally occurring (i.e Series X & PS5 being close enough in performance to basically result in natural parity).