Disagree - nobody seems to mind netflix' monopoly...
Even with "code" competition it won't mimic the retail market in the UK where large supermarkets are competing and often using games as loss leaders for strategic reasons.
Digital purchases are already competitive when you take into account gamesharing, and sub discounts like EA access and gold.
But what they need to do is make the digital purchase more compelling - so free trials - (say 10 hours) whereby you purchase the game but if after 10 hours you don't want to keep it you can refund no questions asked via a click of a button.
Netflix has far more in common with gamepass rather than the buying to own model (as much as you ever 'own' a digital copy)
I agree that if the future was gamepass and they threw everything behind that so you were subscribing rather than buying individual titles then that would make it easier for people to swallow. Not quite there yet though, not for the coming generation of consoles. Could be surprised though and they may even go that route but you'd need the backing of pretty much every major publisher so as to not put you at a disadvantage.
Still think Joe Bloggs, mum and dad etc at least for the next few years will still appreciate the retail option even if it were for a code. Digital can be competitive under certain circumstances as you point out but apart from the more dedicated followers such as ourselves, how many know about gamesharing for example. When you compare like for like going strictly off new release prices then you see say average £45 for a disc or £55-60 for digital. Plenty still not ready to accept that I would imagine. I'm all digital for the very reasons you mention above, I'm thinking about the more general reaction.
More than likely one of the reasons that MS would do this now, test the waters and see how well it goes down. Will it be embraced or do they still need an alternate option.
Definitely need to make digital more compelling, make it easier. Even go back to the original Xbox One vision, buy a copy but you can share it with your family/household then you really are getting value for money. The gamesharing we enjoy now is really a legacy of that failed idea in the first place. Maybe it's time to rekindle that idea, may have sunk like a stone in 2013 but could well be ready for a more receptive audience now we are more used to a digital landscape. Netflix, Prime, Xbox, Gamepass, the list goes on.