I feel like Microsoft's games especially their exclusives being terrible has had a lot to do with it. Like if you look at Sony and Nintendo, their exclusive game libraries are full of hits. Nintendo has a sort of niche with their IPs and their handheld games to such an extent that Switch still continues to sell very well. Sony has had some very popular exclusives like Last of Us, God of War, Bloodborne, Spider-man, Final Fantasy 7 remakes, etc. A genre that should have been generic---OFFLINE AAA single player games---have somehow become something Sony delivers especially well on.

Meanwhile Microsoft's stuff have been awful. Their latest exclusives were Redfall and Starfield, both shit games. I don't even remember what they were doing before. Microsoft have fully stratified themselves as rent seeking parasites because of which they are not able to look past producing shit live service games and throwing money at their problems.

I feel if they made actually decent games, which they absolutely could with the money and resources at hand, their hardware would sell better even if the games were released on PC and Steam. But Microsoft are gonna live and die by terrible games.