Where is the evidence that says gamers don’t want cloud? When they put Fortnite there they got over 4 million on Xcloud with over a million new gamers. Over 4 million people played Fortnite via Cloud Gaming (of which 1 million new customers) - Gaming - XboxEra Geforce now was able to get over 25million in 2 years. The issue isn’t that people don’t want cloud gaming but more an issue of server capacity. Xbox cloud infrastructure can’t hold 100 million right now. Even now you get queues. In the FTC document Xbox mentioned the idea of reaching 100 million by 2030 which I’m thinking they would by then be able to support that many.
In any case I don’t think the idea is to use Cloud to get to 3billion plus. The PC hybrid or OS is certainly another way where they let their partners make Xboxes in different regions supporting it with their OS similar to the way Android OS is used by many phones with Google’s app store being the DeFacto store. I’m guessing within the next 5 years TVs may be coming with built in gaming hardware. I wouldn’t be surprised if LG and Samsung TVs are able to play games natively within the next 5 to 10 years I don’t think film and TV shows face similar situations. The gaming industry, the console one in particular is shrinking and has basically only 3 companies competing while the movie industry is big enough for the content providers to participate and compete.