Mobile games at the time were all OpenGL ES, which Microsoft refused to support in favor of Direct3D.
Then there was Microsoft's perpetual need to start over. WM6.5 to WP7 broke app compatibility. WP7 to WP8, entirely new APIs. WP8 to WM10 there was UWP and Continuum, again forcing major rewrites if you wanted the new features.
And finally how Microsoft treated the devs themselves. Ad-supported apps depended on Microsoft's ad network which was artificially kept alive by Microsoft injecting money for Xbox and Office ads. Once Microsoft stopped, the whole thing folded, leaving developers with a sudden loss of income.
Developers from countries in Microsoft's 2nd tier additionally reported poor treatment and Kafka'esque bureaucracy preventing them from publishing apps: https://toshl.com/blog/why-publishing-on-the-windows-phone-m...
This is why I think the app situation would not have fixed itself over time, and MS efforts to ease transition like Project Islandwood were doomed from the start, because those fixed a problem but not the problem.