It's a rather disingenuous statement, honestly. Microsoft knows exactly what happened to their involvement in PC Gaming. It boils down to this, they wanted to enter the console market, and needed to leverage all of their own studios, as well as any 3rd party exclusives, as well as timed exclusives onto their new machine, in order to make it a viable platform for people to buy into.
They inferred through the popular business of PC gaming servers, that they could create a closed network and sell access to the common consumer, and probably had an idea that DLC could open the kinds of revenue streams we're seeing this day and age. Mind you, it was only an idea, given prior to your XBL's and PSN's, most 'DLC' was user created, whether it's just cosmetic changes or actual maps, equipment, vehicles etc...
For them to say they 'lost' their way, assumes they didn't know what they were doing, and well, that's the disingenuous part. They knew what they were doing, basically butchering what they did on PC, to create interest/demand for console. Right or wrong, isn't really important in this case...simply strange to try and rewrite history, so to speak.