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1.) The crux of the issue is that I haven't seen any convincing argument to explain why a substantially worse service would massively expand subs. Like the only path to that, that would make sense is if MS massively expanded their developers. Like if Ubisoft, EA, Activision, Take Two were all under MS's umbrella, maybe? But there's 0 chance that regulators would allow that. Even just Activision seems to be off the table (and it would get harder with every major acquisition.)

2.) On this bit in particular: History show shown time and time again that with 3 consoles, 1 gets burnt.

We have a very small sample size. It's very difficult to come up with conclusions based on how limited our sample size is. 

In a lot of these cases there are extraneous reasons why one of them doesn't do as well, that has absolutely nothing to do with there being 3 of them. PS3, X360, Wii all sold massive numbers. Two of them lost a huge amount of money, largely because they were overengineered, and one of them had a massive hardware issue. Xbox One had some marketing blunders, and issues with their studios. The biggest thing holding the Series S|X back is major shortages, followed by a development pipeline that hasn't been particularly consistent.