You are missing the point tho. Subscribers to GamePass don't own the titles, so MS isn't exactly losing a game, you are renting it, and they will be renting their games to a lot of people that aren't normally interested into the games either.
GamePass is free marketing for the games. With the full retail versions, people can pay for it than return it a week later getting a full refund on the game. With GamePass, MS has already made their money. It also promotes their store front which is more profitable than paying for it at retail level.
GamePass also grants discounts to the full digital games as well. So if you enjoy playing Grounded, and wish to purchase the full game, sometimes they take 10% to 20% off the price if you are a member.
MS's direction with GP is quite simple, instead of having 30% of your audience subscribing to Live, they are aiming to have most if not all members subscribe to GP. Now lets do the maths..
Example: $10 by 1 year is $120, times that by 20m Subscribers = 240m in just 1 year of service and that's only at 20m subs. 240m now times that by 3 years = 720m. That's how they make there money and that's not including digital purchases, there Live members and their retail sales. GamePass is a long term investment not a short term investment. It not only cuts out the middle men in Retail but it is a service that will continue to grow and with 14+ gaming studios placing all their games on the service, its not rocket science that it will be driven well.
I don't think it can be that simple. Someone has to pay the devs if they're losing retail sales (aren't some moving to $70?). They have to pay for the servers/bandwidth. This seems more like getting as many on board and hooked as possible, then jack up the rates. I wouldn't trust it. Rather than get locked into forever payments I still prefer to pay once for a disc and that's that. Physical is the least likely to turn into a scam later on.