Because Xbox was going to be stuck in 3rd place no matter what they did.
Think about that. They spend massive amounts of money on game studios, they lose huge amounts on hardware, they spend on new technology like Kinect, they even leverage Xbox with their Windows monopoly. The money flows from Microsoft like water and they try so many things to force their brand to the top.
And they're stuck in 3rd place.
Microsoft does not buy their way into an industry to be in 3rd place. They don't care about gaming, they want market share so they can impose their ecosystem on as many people as possible with subscriptions and services and related products. Gaming is not the destination for Microsoft, it's a Trojan Horse that allows them access into the lives of even more people. In order to accomplish that, they need to bulldoze the competition and take control of the industry. The Xbox One launch was a preview of where Microsoft wanted to take gaming.
Not only did that NOT happen, it has become clear that it will probably never happen.
So they shifted gears. It's really as simple as that. Xbox going third party isn't making them fail, they're going third party because they knew failure was inevitable. Sure, by most standards Xbox was in a decent position, but when you're a behemoth like Microsoft, last place is just not acceptable.
