Indeed they haven't, Microsoft is only one of the biggest publishers in the world, and regardless of XBox the console, Microsoft Games Studios is doing great.

Are you sure they're doing great? By what metric?

What have they produced recently? I found a few lists online and looked at Wikipedia, and their big hits are all > 10-15 years old (or sequels/re-releases). Many of those are decade-old acquisitions of franchises that were ancient at acquisition.

Revenue, or forward revenue? Their most recent quarterly games revenue was down 9% YoY. XBox console sales (leading indicator) are down 32%: https://www.tomshardware.com/video-games/xbox/microsofts-gam...

Market share? The top N companies from this list have $197B in annual revenue. MS Studios is toward the top of the list, but they only have 12% market share. https://en.wikipedia.org/wiki/List_of_largest_video_game_com...

Distribution and marketing? I wouldn't even know how to buy one of their games. I have a Linux gaming PC, a Mac, a switch, an iPhone, iPad, Apple TV and a XBone. We spend a few hundred dollars a year on video games, but I haven't seen anything suggesting any MS studio products work on any of our hardware, or are available on any distribution channels that reach any of our devices. Maybe they're on iPad, iPhone or Android? I haven't checked because we don't use those for gaming.

I don't think we're that strange for having zero windows machines. It's down to ~ 30% of web browser market share: https://en.wikipedia.org/wiki/Usage_share_of_operating_syste...

Windows is at ~ 95% of steam market share, so I guess that's one bright point for MS studios. However, many game developers release on Steam and console, so it doesn't imply that 95% of those other studios' customers could run a MS studio game.

Customer retention? The last time I plugged the XBone in, I spent 45 minutes screwing with bugs in the account password dialog, finally logged in, and then walked away. I unplugged it for good after the updates completed. In contrast, I spent less time than that installing Linux + Steam on my most recent PC. I guess they dropped support for XBox One at some point? I started having problems with it five years ago. I don't remember a big compatibility-break launch since I purchased it, so I'd expect it to be able to turn on + connect to their servers, or at least run the games it's already downloaded + installed.

I do own one MS game that still works: A copy of Minecraft. It took over 8 hours to figure out how to get it stop constantly asking my kids for my master MS account password. That did convince me to actually wipe all data from my Microsoft account, so I guess it was a win.