If 30,000 people were going to buy your game at $40 or whatever, but 3 million will try it at $10 for the month then yeah it makes sense, especially if you add in a conversion rate of people switching to buying it - at a discount - to keep playing or have for offline or whatever.
Do they get the full 10? Because Microsoft hosts the service, other games probably get played. Therefore I imagine that the actually money you make is pretty small in the end.
I can see it being viable if the attraction and userbase is big enough, especially for smaller games that include some microtransaction.
Keeping or continue playing it mostly works for multiplayer though. If it is for multiplayer then it looks weirdly like MMO subscriptions, you pay each month to play the game. There would obviously still be the option to actually buy the game and cut out the monthly fees.
I get that concern here, but these companies probably have years of data that show most people are slower than that. And for short single player games, if it's not God of War, then it's got a real shot at bombing hard since word of mouth on SP games isn't as infectious as MP games.
For sure they have extensive data, from the outside looking it simply looks strange how people are supposed to make money off this system. Gaming prices and inclusion of microtransaction increased the amount of money being made over the years to counter rising budgets and yet somehow it goes back to 10 a month. =/
Smaller, shorter single player games might get something positive out of it, especially if you look at marketing budgets that are needed to reach a sizable audience and actually translate them to sales.
Certainly Gamepass makes sense for older games that nobody would buy at full price anyway. They are good to fill up the catalog because some people might still want to play them or play them again.