This video shows xCloud running on an XBox One and compares it to native XBox One and XBox Series X.  The improvement of xCloud over native XBox One is pretty great.

I think the main problem here is that we are currently not in 360 era and the rules of the game completely changed. Something that was easy to do for various reasons in the 360 generation will not work in modern days or won't be as easy to achieve. The reason why Microsoft could easily secure exclusives in 360 era was not only their huge load of money, but the gaming market landscape itself. PS3 was badly designed console with developers struggling or having frustration developing games for it. Second, it was not clear how PS3 would perform because of Xbox 360 starting really well and PS3 being overpriced making it a tough sell even for a lot of Playstation fans. Third, Microsoft was a brand new player in console gaming space with a lot of ambition. Fourth, Xbox 360 and PS3 were quite different consoles hardware-wise making ports from one console to another not an easy job. All these factors resulted in a situation where Japanese devs were willing to take the risks and take Microsoft's exclusivity money. Also, if PS3 would have ended up selling even worse than it did, who knows, Sony might have even had gone out of business and in this case Japanese devs would be left out without home console market entirely as Nintendo was doing their completely different thing with Wii at the time. So, testing waters with Microsoft and building relationships with them in the process was a wise decision. It all has changed in late 2000s though, not only did it become clear that PS3 is actually doing not that bad at all, devs becoming more and more familiar with it, and Microsoft themselves giving up on spending money on Japanese exclusives. After all this happened, Japanese devs simply returned back to what they used to do during PS2 days and focusing on Playstation as it is a proven way for them to do business.

Now let's get back to the recent times and what out of the four points mentioned we have here. PS4 and PS5 are not badly designed consoles to make games for, for the most part due to x86 PC architecture every dev is familiar with. Playstation is a market leader with Xbox obviously trailing behind. As a dev, especially from Japan you can't go wrong with making a game for Playstation, no risks here. Microsoft is not a new player in console gaming space and they've been here for 20 years (almost). At this point everybody knows who they are and what is their potential. The last and probably the most important point in my opinion - PS5, Xbox Series X|S and PC are very similar hardware wise to the point that making exclusives for any of these platforms while not porting the games to the other two is just not a wise decision considering how cheap the porting is. Xbox for obvious reasons is the worst platform by far to make exclusives for here for Japanese devs as it has by far the smallest potential audience outreach.

Now back to the potential devs and studios you mentioned that Microsoft can work with. Futatsugi's Grounding Inc, Swery's White Owls, Sakaguchi's Mistwalker - let's start with these three. Unfortunately, as I see it, they all are incapable of delivering games that will move a needle for Microsoft in Japan. I guess that's what we are discussing here. All of them are making such a small niche games that will never have a console-selling potential. I doubt games that these studios make sell a lot more than 100k copies even as a multiplat. I don't think that I need to explain that with such sales on all platforms it will be a suicide for them to go Xbox only. Of course they are all great devs but sadly their studios don't have a lot of resources to make games that will be visible as a system-seller in a region. I think just paying them to make exclusivity deals will really do nothing, potential acquisition is a way better strategy with these studios, because once they are acquired, you can grow them to the needed size to make them capable of producing such games. Spending money on exclusivity deals will do nothing for both MS and these studios and will probably kill them off in the end as I've said. Itagaki - with all due respect to his past games, can't take this guy seriously, he has been out of business since Devil's Third almost 10 years ago and even this game wasn't all that great. Probably old dude should just retire at this point, doubt he even can do something good these days.

The last and my favorite part of your post that somewhat backs my point. The 360 first year exclusive games. Ninety Nine Nights - the game only saw one sequel and didn't really do that well. Safe to assume that IP is dead at this point. Rumble Roses XX - only one game. IP is dead after that. Dead or Alive 4 - went multiplat after this one. Tenchu Z - IP died shortly after this one. Blue Dragon - never got a sequel on Xbox after that, Mistwalker tried to do something with IP on DS but it didn't work for them as well. DoA Xtreme 2 - never saw any of it's sequels hitting Xbox after this one even though series went multiplat. Dead Rising is the only exception here - the IP that ended up being successful with 2 sequels being Xbox exclusives at launch. But Dead Rising is also a bit different because it is the game designed to appeal to Western audiences, with worldwide audience carrying it. 

P.S. I completely agree with @Machiavellian that I don't really see the point in dire need of Japanese exclusives, just getting all third parties on board is what should be the focus for Xbox when it comes to Japan.

Finishing up Psychonauts 2 and honestly a litter underwhelmed given the reception. The aesthetic is great, but it get broken up too much with the story bits. Not the biggest fan of the game play too. Any one have any thoughts on this game?

Hope that it’s Quake, they wrapped up Doom Slayers arc in Eternal’s DLC so they can let Doom rest for a while.

Predicting a 92 meta for this one.

Tried the xCloud out on my Series X this morning, played some Crackdown 3. Performance was way better than last time I’d tried it. The convenience is amazing, you just pick from a ton of cloud enabled games and start playing. Download if you like. I can see myself doing this with GamePass games in the future instead of downloading them.

The thing is, anyone in Japan getting an Xbox is not getting it for Japanese games or content so the question is why is the sales strong.  Delving into that could be the winning formula more than trying to entice Japanese developers.  I also believe that MS should be enticing regions that are not known for content but looking to break things open.  There is a lot of content coming out from other regions that look very promising and getting on board early might net some good results and keep cost in check.

Well aoe4 has some problems. The servers went down and it's impossible to play even private multiplayer without them, no Lan options so we had to abandon playing.

There is no pause in multiplayer matches which is crazy, no save either which is more common but still annoying.

Other weird oddities too such as no random civ option, no random map option. Keybinding changes don't work in the middle of a game. Only takes affect in the next multiplayer match.

Basically every problem I had with it in beta is still there months later.

It's good but it still feels like it's beta or early access.

^^But Tim Dog said it was a big deal, kek.

Just for cloud stuff. Not a big deal.