I think MS will use Xbox Series poor sales to try to justify one more big 3rd party acquisition. Then they can try to put together a winnign strategy. Right now their efforts are scattershot and the results are poor.

If they wanted to be bigger they would have been.
They closed,merged, or released studios until they have their current size (still fu**ing huge).

I think people forget how big activision is.
Apparently if you take all the employee's at xbox and bethesda.... they only make up 1/4th of total employees.
Activison is the remaining 3/4th.   xbox could take some people from activision and make a new studio or two if needed.

Also how many studios do they need?

Xbox + Bethesda is currently 23? studios.
While activison is another 15? or so (just gigantic studios in size)


Xbox already has more than enough, without buying up more studios.
Basically, they already dwarf nintendo and playstation, by total studios and employee's.
They have all they need for their "winning strategy" already.
They just need to manage what they have well, that's all it takes.

I actually suspect that since gamepass needs to pay for all the 1st party games that goes into it....
they don't want to bloat up too much, affecting operating income too much.
(gamepass does eat into game sales, if games also go there. Total subscriptions limit how much, they can afford to put in there, without taking losses)

I also suspect someone above phil, told him its been 7+ years, its time for it (gamepass) to carry itself.
Basically they want him to keep it profitable. After spending over $100bn buying games studios... I can understand that tbh.

TLDR:   My take, they have all they need, and it doesn't make sense to spend more on 3rd party studios.

Xbox has only had one hit console to date globally, so this isn't a shocker.
France seems to love Switch and like PS5 quite a bit, so there doesn't seem much room for Xbox.