>Some team members output has severely dropped. I've seen people playing video games during work hours for example. Also work and free time has mixed to a point where people just randomly take hour or two to go skiing or for a walk and routinely just quit at the normal time.

Dear god, people enjoying their life. This is the worst. Clearly society can't function unless everyone is miserable.

Have you ever considered that maybe the entire 8 hour work day is bullshit? That it is entirely possible for people to contribute productively within different time-frames?

>I'd argue my Quality of Life has gotten significantly worse especially since they closed gyms. Yes, they are now open, but there is also like a meter of snow outside so I probably won't get to the gym until spring actually starts.

What does this have to do with working from home? What could remote work possibly have to do with your inability to stick to a gym routine?

>I'm sure we will lose some people since they want to be 100% remote and that's fine.

You won't "lose some people". Unless your company has the pay and clout that Google has, your company will be decimated by a wave of people quitting.