Well I did say online, and this is how most people play anyway. Local multiplayer isn't that big compared to online multiplayer. Infact, online multiplayer is much bigger than singleplayer gaming - it's the main method of gaming these days.Well, this is true in theory, but only for online interaction. VR gaming simply isn't able to provide an engaging local social gaming experience, and for many gamers, the idea of sitting down together on a sofa with friends watching one person ambulate around in a virtual world totally closed off from their friends isn't their idea of a good time.
Practically speaking, however, even online, VR gaming is totally not a dominant social gaming activity the way popular online MP games are. So there's currently far less opportunity for MS to monetize it the way they can with for example Halo MP or Gears 5 online MP. So I'm sorry I just don't think your claim about VR being the "pinnacle of social gaming" holds up to any meaningful scrutiny at all, especially as we're talking about the business of videogames (and not the ability to convey mechanical interaction virtually on a theoretical basis).
Local social gaming experiences can be done with VR too, in the form of asymmetrical games.