Spencer went out to say that they lost the most important generation to lose (XBOX One gen, not the current one. Corrected thanks to @Boldizzle ), and that they were going back to the drawing board to turn things around. They just hiked up the prices of Game Pass and the XBOX Series X. They also basically confirmed that there won't be any mid-gen "pro" model and that they expect the next gen to come in 2028. And now their plan to buy the industry is also failing.

So what's next? I doubt they have a queue of heavy hitting first party exclusives in the oven to maintain them until 2028. I'm almost certain that they expected to buy themselves some time by acquiring studios and turning their IPs into system-seller XBOX exclusives.

This is a really good point. I have a PlayStation, (disclaimer) so I'm relatively content with their success in the buying-studios-to-produce-console-exclusives game. But it's objectively bad for the industry. Gamers don't benefit because they can't play where they want (or can afford), developers don't benefit because they lose creative control and market share (with the trade off of some short term capital influx), and publisher's don't even really benefit because its a game of mutually assured destruction that all ends up on Steam discount list anyway.

Plus: if Sony does manage a definitive win in the console wars that will shut down billions of dollars of investment that Microsoft is currently putting into the industry. And not just on the console side. That's bad for everyone. Microsoft has been leading the way in accessibility and interoperability between platforms (Game Pass on mobile/console/pc). And that's to be applauded.

I read somewhere (forgive me for not having a link) that the games industry recently shrunk for the first time in a long time. I think it largely has to do with tiktok and other more instant gratification choices for free-time. But gaming entering into the hellscape of streaming fragmentation is not drawing outsiders to the hobby.

You make a good point about the blow to creative freedom. Exclusivity doesn’t seem to correlate with innovation anymore (sans Nintendo). Even if you look at Sony, with its massive lead in quality first-party exclusives, the majority are gritty narrative third-person action games. They are easy to market because they have a compelling story, are mechanically simple to appeal to a wider audience, and are relatively short to lower the commitment.

Consolidation will kill creativity in the long term. Just look at the post-Disney MCU/Star Wars film industry. Games will surely follow, given the way things are headed.

Edit:
Disclaimer - Just my opinion and I play on PlayStation/Nintendo/PC.

I think you're right. Both about games, and tv / movies. Look how it turned out for Ubisoft when they turned every game into Assassin's Creed / The Division. Ghost Recon: Breakpoint ironically being a break point that showed that this strategy leads to player exhaustion, burnout, and failure. Kevin Feige ironically said something like, "Chocolate ice cream is tasty, but if you only give people chocolate ice cream every day, they'll get sick of it and want something else. Which is why we have to keep mixing things up and giving people something new if we don't want them to get tired of it."

...and he didn't even take his own advice. Well, not in the long run anyways. And we see how it's slowly failing as of late.