Game Pass is Microsofts disruptive service to grow Xbox revenue and profit way beyond the 50 million or so xbox users. This doesn’t mean Xbox will neglect their own hardware or their platform. Why would they? Its still good money. But Game Pass is the most important aspect of their business, thats why we are beeing bombarded with it in every conference the last two years. It also doesn’t mean Xbox relies on Sony or Nintendo, they have just devices where you can play Game Pass games. And on local Xbox hardware you can do this better.
The success of Game Pass (and Xbox) depends on masses of users, that is not a failure, thats by design. More Game Pass users mean better Game Pass content and better Xbox games. The results are already here.