I believe that they would still be competitive, it's just that game pass is a real killer service.
Xbox one generation was shit, but still had a user base. Of course not as high as the PlayStation, but they still had a big playerbase.
I went to pc instead of jumping this gen, but after my GPU turned faulty, and with the prices of the gpus today I jumped back on my one x after playing a little game pass on my pc, and the catalogue between these two platforms are like day and night.
I still love my pc, and I'd pick freedom and keyboard and mouse any day over any wallet garden, but being a person that can't toss out 800 euro for a GPU, an Xbox Series X is just cheaper.
I know what pc brings, but atm it's just too expensive. And with having my gf, going digital, sharing games with game pass, and being able to just buy one digital game and make us play simultaneously is just so much cheaper.
Without gamepass i would just suck it up and have bought a new GPU, but with game pass there's just so much content for so little money.
Game pass is not make or break for xbox, but together with series s it's a cheap entry price no pc or console manufacturer can compete against.