Do they? Because it seems effective for most GAAS. The hypothetical millions dropping off because they didn't want to play for an hour or two during a two week event don't seem to be engaged with the product.
Again it wouldn't make a lot of sense as the events are geared towards specific playlists to funnel the community into that playlist for a specific period of time. You lose that and drive up wait times for those modes and lose the whole reason they exist...to please the 'millions'
I know early on, the FOMO + the challenge based system was a major turn off.
For many people these days, unlocking customization items is as much a part of the "gameplay loop" as shooting enemies.
If the barrier between the player and the item is fun to navigate, there's no issue. But when you put a time constraints on something that feels more like work than play, you're doing harm to that loop.
If I have FOMO on some armor coating, but I've got to do 5 rare acts in a gamemode that I can't even guarantee will show up during my playtime and I can only play for 5 hrs a week - the developer has effectively sucked the fun out of collecting armor coatings. Even less fun you can pay to maybe get a more tenable challenge, but end up getting something worse.
We shouldn't understate how much weeklytime investment was needed to unlock things, especially early on in Infinite's lifespan. The RNG component to what challenges each player got, and the likelihood of the appropriate gamemodes being queued made it an absolute bear. Just baffling design decisions that shouldn't have made it passed the brainstorming stage.