I was listening to Windows Weekly this morning and they had a big section devoted to Microsoft closing/selling/spinning off several game studios. While listening they mentioned the price hikes that Game Pass underwent last year and their reduction earlier this year. In talking about the pricing dynamics of a subscription service I got the idea in my head that maybe by trying to bundle newer games into the service its over inflated the value of these games.
When Game Pass was a cheap service to play older and smaller games I bet the costs to acquire games was probably right in line with their expected value in return. I.E. They were making a good return for the money they were putting in. When larger (AA or AAA) games started to become the focus I suspect that Microsoft started to overpay as they bet that these games would increase the subscriber base. That threw the careful pricing of games for the service out of whack and lead to its loss in subscribers when they dramatically increased the cost.
I wonder if Game Pass stuck with its original intent (older, smaller titles) if it would have faired better, maybe the subscriber base would still be stagnate but at least it would still providing a decent return. This is all just me speculating and I have no evidence to back it up. Just another opinion out on the internet.