Idk if yall actually have gamepass but if you do then your statement is saying you wouldn't buy the game during the first month. The discount doesn't apply within the first month for games that launch on gamepass. And even then you can usually find the game on sale cheaper than it is on the Xbox store (For example MLB The Show is 47.99 with the GP discount on the Xbox store but has been on sale shortly after launch for $35 or less physical)I won't speak for everybody, but if physical is 30% cheaper but Microsoft is offering me 20% off as a GP member, I would sacrifice that additional 10% just for convenience sake
Also more and more people are preferring digital copies. Because it is convenient. Even if it is more expansive or have same price.
Guess what effect additional 20% off for Game Pass members have...
You are right. Even more people flocking to digital.