MS has been making the console less relevant for years now. I think they want out of the hardware market, but doing it the Nintendo way. The Switch is practically there for the ones that were playing Nintendo games on console to switch to handheld (that can also work on tv). MS has been propping up their PC presence with gamepass and the xbox app, getting people to switch from buying games on console to play anywhere through gamepass.
Sell hardware, sell 3rd (and 1st party) games and mtx on their platform, sell live services and gp subs.. to millions of hardcore gamers who prefer gaming on console or PC and are spending good money. Gamers who play multiplayer games and want the best performance. It's a huge community and business.
I don't see how game pass would thrive by being just a Netflix of games amongst other subscription services and mobile games.