I'm not surprised at all that people who already own a game via Gamepass did not also go out and buy a physical copy at retail - why would anyone do this.
However, it does beg the question: Has this hurt Microsoft's relationship with retailers? And by extension, does XBOX brand or does consumer awareness get affected when people walk into TRU and Walmart and see giant (red) sections for Nintendo, Blue Sections for Playstation, and almost nothing for Xbox? The xbox sections in my local walmarts and TRUs are shrinking every time I go into the store. How likely is the Merchant to keep allocating shelf space when the supplier is cutting them out of the profit loop? Obviously Netflix doesn't need merchant shelf space to succeed, but that's still a bit of apples to oranges comparison. People still need a place to buy the consoles and controllers for the time being, and around here anyways parents still like to buy actual things to wrap up for under the christmas tree. I'm sure Microsoft has considered and calculated for this, and maybe the game pass revenue is so good it outweighs the negatives