Until I see actual numbers on Gamepass I won’t believe that it was a failure. It isn’t a direct comparison of “gamers are spending $10 instead of $70”. People who would not buy a game that just came out will willingly pay for Gamepass every month. Gamepass also exists on PC, so Xbox is dipping into a user base which otherwise might not buy many products from them.
Yes they almost definitely make less money from some people, but they might make that back and more from people who otherwise would not be buying their games. It’s hard to use your intuition here without some numbers