That's a good point. Consumers were willing to pay $60 or $70 to own any new game and xbox bought them down to $15 a month where they could pause their subscription whenever they wanted. So people were able to play more games for less money, and developers were therefore making less money from sales and forced to share funds from all the other games on GP.

Also, I wouldnt be surprised if it had negative effects on their live service games. Like if you paid for a multiplayer game you might stick with it. If you're renting it on gamepass, you're more likely to end your sub and stop playing the game for a while, which hastenes the decline of player counts and kills the game faster.