They're losing a potential sale. I bought Forza Horizon 3 launch day, I bought Forza 7 launch day. That's already more money than I spent on getting gamepass ultimate till April 2022. Money that microsoft has to share with third parties.
At full price yeah it's a deal, with the insane free upgrade from gold they did, that's their bottom line hurt for a while from consumers who took advantage of it such as me.
But looking at the general £10.99/month price, I can see that it will probably be beneficial for microsoft from most consumers, me however? I will likely pay £10.99 and play through a game rather than the £39.99+ I would have paid for a digital copy before and cancel my sub until the next.
So it depends on the individual consumer, some gamepass might make MS more money than it would otherwise, but some consumers gamepass will actually result in less profit from those individuals.
I do agree that it depends on the customer. The thing for Xbox is they also offer great multiplayer options. Majority of their big hitter games like Halo and Gears etc offer long term replay-ability. Those games have massive followings with online so a rental service will either end up making those customers pay more in the long run or end up having them buy the game via the store and that's where the money is. If you solely just play single player games and are not a huge fan of owning your copies and online isn't a thing for you than that's where MS lose, but i feel that will be a minority of people. Remember you have new gamer's entering the industry, fresh going to college and massive debts to pay.. for them, paying for full price retail games isn't an option so a service where its a tiny chunk out of the wallet compared to a lofty $100 for just 2 games is expensive.
We don't know how much cut 3rd party devs take from the service, for all we know, it could be free as its free marketing, like playing a demo. Lets not forget, the service also rotates its games (Aside from 1st party games) so its only for like a few months one game will be their than the next it isn't, so it isn't as big of a deal than it sounds, however we don't know for sure, i wouldn't put it out of the realms of possibilities.