The interpretation there though, is that if they can't win over people with libraries on other platforms (like Steam and Nintendo) then the answer is clear.....buy them all. If you buy someone's library and it becomes part of your ecosystem, then that person will follow.I'm not defending Microsoft or Spencer (I was into hating Microsoft before it was cool, back when Gates was still in charge). But he was saying that individual hit games weren't going to be enough to win a competition with Sony or Nintendo due to entrenched libraries. And he is correct about that.
And frankly he is wrong about that in the first place. People are willing to expand to other platforms regardless of library somewhere else, so long as you offer them things that they value as well. Thus if you made good games, actually you have to make great games at this point, then people will in fact come over to your platform to experience your great offers as well.
People have Nintendo and Playstation and Steam libraries, or combinations of those why? because each platform offers something worthwhile meaning games. So there is no reason Microsoft can't also do that.
They simply don't want to. Spending money to make a game is a risk, but buying and absorbing an entire platform has no risk because you are virtually guaranteed to collect that installed userbase automatically. Or is significantly less of a risk. Xbox doesn't need a Pokemon when they can just buy Pokemon entirely and instantly collect all that customer income. Sure it's a hit to the wallet at first, but it's returned rapidly.