The product is not the individual game it’s the service itself.
Microsoft prints money. They can make games at a loss in perpetuity while their core business eats those losses and still prints money.
Their gamble is eventually either they can divorce the service from the hardware and expand the potential customer base or they can make a service with compelling games that offers customers such a value proposition they subscribe.
Microsoft’s entire business is software as a service. Why wouldn’t they evolve to bring that approach to gaming? Especially when the selling of additional content for games typically produces more revenue that the selling of the actual games?
Mobile gaming is far more valuable than console gaming and the predominant model there is free to play. Other business models besides selling people $70 games can work.
No they can't nor will their shareholders allow them to keep doing so. But like the news that Phil straight up told the truth from a certain point of view, we'll just wait for that news to drop sometime in the future.