Definitely a winning move. Netflix beat Blockbuster, TiVO, AND cable's on-demand video services with a worse content library and harder UI (initially - those boxes sucked) - because it was cheap, easy, and felt free. GamePass recreates that, at least for casual gamers.
Plus, GamePass locks you in like consoles once did. That stickiness in recurring revenue is hugely valuable in itself, and because it has a network effect (this was basically the reason for the ongoing console wars).
Combine that with cloud gaming, and the lock-in and UX just gets better.
Their main barrier is good content. Thus the splashy buy.