Netflix is losing subscribers?
Netflix stock prices are declining? They are near their all-time peak and their performance outlook is positive (short, mid and long term):
Their market cap is currently at 234 billion, so their debt is only 6 - 7% of that.
They were losing subscribers last year in the USA and shares fell in July after posting their earnings. Both have gone back up thanks to covid-19 which also artificially propped up console and game sales. This effect won't last forever when the results of the recession start to hit and the market further fragments. For now Netflix still has quite a monopoly outside the US.
And that debt will get higher and that's fine, Netflix has been trending in the right direction for a few years now. It's just how they do business. IIRC Disney is also in a lot of debt.
You can buy all of these games outside of the service. It's not as if GamePass is the only way to experience them. Most Xbox owners and PC users still don't use the service. A monthly service fee and enticing users to buy DLC and the games themselves on sale can also recoup much of what you'd otherwise lose thanks to the used game market. MS is also not Netflix and not in any debt.
Your concerns are not unique but I just don't understand them. For these fears to come true MS would need to start limiting their software to GamePass or, at best, delay the release outside of GamePass for like a year after it hits the service. Then they'll have to find a way to get people to stay subscribed to the service while they apparently release small scale filler because they are cutting all the budgets. Also you mention Netflix and debt and admit they are paying for expensive content... why isn't Netflix cheaping out? Because they know that no one will want to buy cheap content. There is Hulu for that.
My concerns are, there is not just MS. Others will follow suit, the market will fragment as is happening now with tv content. Some will make things exclusive as is happening now with tv content. I wasn't concerned about Netflix, now I can't watch S4 of the Expanse on blu-ray among other things.
Debt is fine as long as the market keeps growing exponentially, it won't. Netflix can't cheap out indeed, they can't keep expanding debt indefinitely either. Plus their prices have doubled since they started plus extra for 4K, how much will game pass land on to make it profitable?
Season 4 of Expanse is out in December last I heard. Obviously Netflix is more expensive now, it used to just rent out DVDs.